REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
COLLEGE OF BUSINESS ADMINISTRATION
DEPARTMENT OF HUMAN RESOURCES DEVELOPMENT MANAGEMENT
STA. MESA, MANILA

INTRODUCTION TO ENTREPRENEURSHIP

Submitted by Submitted to

NOEMI D. ALCANTARA Professor Abelardo M. Abellera
BSBA-HRDM 1-6D

1. Know the process of starting a business. When you start a new business, you develop your idea in stages. Creating a comprehensive plan using the correct process for starting a business is essential to success, according to the Small Business Administration's online resource titled "Small Business Planner." Planning a business in stages in the correct order, helps to ensure that you cover all of your bases and develop a solid business foundation.” Preliminary Research, before you can start planning your business, you first need to establish what kind of business you would like to start, according to online business resource Business know-how. Develop a list of business ideas, and then begin applying practical questions to determine which ideas offer the best opportunity. Research your ideas to find out if there is a demand for your business, what the legal hurdles may be in getting started, how much competition there is and whether you feel comfortable dedicating your resources and efforts to that business. Business Plan one of the initial stages of any new business is the business plan, according to the Small Business Administration. Your business plan outlines the kind of business you will be starting, how much startup capital you will need, what kind of facilities you will need to house your business, how much staffing you will need and revenue projections for the first three years. Your business plan becomes your blueprint on how you want to build your business. It provides you with guidance on how much financing you will need and it becomes the document you present to investors that may be interested in giving you the capital you need to get started. Financing, before getting started, you will need to secure financing for your business. Follow your business plan to determine how much startup capital you will need. Before speaking to investors or lenders, determine how much of your startup cash you can provide on your own. A personal savings account can offer startup money. If you are still working a full-time job, then start cutting down your expenses at home and apply the savings to your business. Once you have determined how much you have on your own, you can then move to investors and lenders. Private investors such as venture capitalists will want to be involved in the operation of your business. You may want to consider taking on a partner in someone you know rather than allowing an investor you do not know to get involved in your business. A lender, such as a bank or credit union, will want to see some sort of stability to your finances. You may have to use your personal credit rating to secure your startup funding from a lender.

2. What are the banks that lend money?
Professor Hyman Minsky once wrote “Banking is not money lending; to lend, a money lender must have money. The fundamental banking activity is accepting, that is, guaranteeing that some party is creditworthy. A bank, by accepting a debt instrument, agrees to make specified payments if the debtor will not or cannot”. “Banking is not money lending”? Surely some mistake! Why would an economist as famous as Professor Minsky make such an outrageous sounding statement? Well the answer is that it’s perfectly true. Crazy though it sounds, banks don’t lend money at all. To understand why this is the case we must understand some technicalities about money. Most people imagine that money is simply a system of government-created tokens (physical or electronic) that get passed from person to person as trade is carried out. Money of this kind does indeed exist, so called “central bank money” is of this type. However the vast majority of the money we spend day today is a second type, technically known as “broad money” or “cheque book money” which can best be described as “spendable bank IOUs”. The concept of a spendable IOU may sound rather strange, and in order to explain it, we must first consider some characteristics of an ordinary IOU, the kind you or I might use.

3. Know the process of getting loans.
Getting a loan, whether for personal use or for a business, can often save the day or help you take advantage of a new opportunity. If you're strapped for cash, a loan might just be the ticket to a better future. However, you must use care and caution when seeking a loan, and you must follow the guidelines lenders have set up. Being thoughtful about how you seek a loan will help you find and get the perfect loan for your specific needs. Optimize your credit report, your credit history is the record of your behavior relating to how you borrow money and pay it back. Your credit report is a main determinant in your ability to get a loan. Get your credit score. In addition to your credit report, getting your credit score is a good idea. Generally, a credit score of 640 or above is considered above average and will not give you problems when applying for a loan. If your score is below 640, you may have a tough time finding a lender than won't charge you a high interest rate or impose other conditions on your eligibility. Establish a stable source of income. Your income is equally as important to getting a loan as your credit. Not only will you need a current source of income for loan approval, but you will also need a stable history of earning income. Gather documentation. You will have to prove your ability and willingness to repay a loan to get approved for a loan. You will need to provide supporting evidence of these qualities in the form of a credit report (which the lender can pull), bank statements, pay stubs and/or income tax forms. Determine the amount of money you need to borrow. The size of loan you need will help narrow your lender options. Additionally, it is necessary to determine that you can afford the payments on the loan size you need. Choosing a loan research the types of loans. You may opt to apply for either a secured or an unsecured loan, and whichever option you choose will affect how you proceed. You can usually get more money with a secured loan than you can with an unsecured loan. Also, secured loans generally have a lower interest rate than unsecured loans. The better your credit history, the lower the interest rate will be. Decide whether you should get a “line of credit,” which can be secured or unsecured. In practice, this type of loan is similar to a credit card: The borrower has a maximum allowable balance, and he/she can borrow up to the maximum amount. He/she does not have to borrow the maximum amount. Decide if a small business loan might be right for you. If you are borrowing for your business, you can consider a small business or other business loan. The best place to get a business loan is a bank, because banks usually offer the lowest interest rates and most favorable terms.
Be very wary of payday lenders. Payday loans offer you personal loans, usually, but not always, for several weeks prior to your paycheck being issued. Unfortunately, because most payday loans are unsecured and many payday lenders engage in predatory tactics, you could be charged from 300 percent up to 750 percent in interest for the life of your loan. Find a lender. There are many different places to get a loan. Explore the following options, taking your loan needs into consideration. Financial institutions are, in most cases, the best place to get a loan. Banks and credit unions may dispense any number of different types of loans, including personal loans, credit cards, auto loans, mortgages and small business loans. Payday advanced businesses. These lenders offer a quick and easy loan approval process but, as mentioned above, lend only relatively small amounts and charge very, very high interest rates. You may not have to apply with a business or institution to get a loan. Pick one loan institution and only apply there to begin with. Applying for a loan can actually hurt your credit score, which can, in turn, hurt your ability to get a loan. This happens because each time you submit a loan application, your lender will check your credit score. Each time your credit score is checked, your credit score can go down. With a lower credit score, you'll have a harder time finding a lender and will get worse rates. apply for a loan. A large part of the process of getting a loan is preparatory; a precursor to the actual application process. Once you establish your ability to repay a loan and decide on a lender, that lender will give you specifics on what documents you need to provide and what kind of paperwork you will have to sign. Wait for the lender to get back to you. The whole process shouldn't take more than five to 10 days before you are either accepted or rejected, depending on how quickly the credit check goes out and the lender's underwriting standards. Pay any necessary origination fees. When you get a personal loan, origination fees are usually tacked on to the principal and any interest you may be expected to pay. Meet all your payment deadlines. Now that the hard part is over ... another hard part begins! You may feel like you're home free after you receive a loan and you can pretty well do as you please. That's not the case. Repaying your loan and staying on track with the lender is very important. Be proactive if you are having a hard time making your payments. If you begin to have trouble repaying your loan, talk to the lender directly. Have a frank discussion with the lender about your struggle to pay back the loan. Refinance your loan if you can get a better deal down the line. This is especially important if your initial loan had a very high interest rate.

BIBLIOGRAPHY

http://positivemoney.org/2013/06/banks-dont-lend-money-guest-post-by-michael-reiss/

http://smallbusiness.chron.com/stages-process-starting-new-business-4204.html

http://banking.about.com/od/loans/a/How-To-Get-A-Loan.htm

http://www.wikihow.com/Get-a-Loan

http://banking.about.com/od/loans/a/How-To-Get-A-Loan.ht