Topic 1 DQ 1 ENT



Grand Canyon University *

*We aren’t endorsed by this school






Jan 9, 2024





Uploaded by UltraTeam12114 on

Topic 1 DQ 1 ENT-420 A new venture and an existing company differ significantly in their ability to obtain bank funding due to several key factors. 1. Existing companies typically have a track record of financial performance and a demonstrated ability to generate revenue and profits. Many banks require a company to be in operation for a minimum of 2-3 years before they can begin to qualify for a loan (Crawford, 2022). New ventures lack this track record, making them riskier in the eyes of lenders. 2. Established companies often possess tangible assets like real estate, equipment, or inventory that can serve as collateral for loans. Banks prefer to have tangible assets as security in case of default. New ventures often don’t have such assets, which can hinder their ability to secure loans. 3. Banks often require detailed business plans and financial projections to assess the viability of a loan. Established companies can provide more reliable data and forecasts based on their historical performance, making it easier to convince banks of their repayment capacity (Crawford, 2022). New ventures may struggle to provide such extensive projections. Banks prioritize minimizing risk, and established firms provide more concrete evidence of their financial stability and ability to repay loans, where new ventures typically cannot do so which hinders their ability to obtain bank funding. References: Crawford, H. (2022, June 15). Why can’t startup businesses get bank financing? NerdWallet.