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Topic: Financing to start a business  

Business Education

 Standard 20.  Understands the financing necessary to start a business
  Level IV (Grade 9-12)
   Benchmark 1.Knows factors that affect the amount of money needed to start a business (e.g., nature, size, and location of the business; current economic conditions; credit policies)
    Knowledge/skill statements
     1.Knows factors that affect how much money is needed to start a business
     2.Knows nature affects how much money is needed to start a business
     3.Knows size affects how much money is needed to start a business
     4.Knows location affects how much money is needed to start a business
     5.Knows current economic conditions affect how much money is needed to start a business
     6.Knows credit policies affect how much money is needed to start a business
   Benchmark 2.Knows the advantages and disadvantages of equity financing (e.g., advantages: all profits go to the owner, may provide owner greater incentive to succeed, disadvantages: risk of losing money that may have taken years to accumulate, may have to live in less style than accustomed to)
    Knowledge/skill statements
     1.Knows the advantages of equity financing
     2.Knows the disadvantages of equity financing
     3.Knows all profits going to the owner is an advantage to equity financing
     4.Knows greater incentives to the owner to succeed is an advantage to equity financing
     5.Knows the risk of losing money that may have taken years to accumulate is a disadvantage to equity financing
     6.Knows living in less style than accustomed to is a disadvantage to equity financing
   Benchmark 3.Knows the advantages and disadvantages of debt financing (e.g., advantages: it may be easier to borrow money than save it, interest on a business loan is tax deductible; disadvantages: high interest rates can make borrowing very expensive, limitations or restrictions that lenders may put on loans)
    Knowledge/skill statements
     1.Knows the advantages of debt financing
     2.Knows the disadvantages of debt financing
     3.Knows an advantage to debt financing is that it may be easier to borrow money than save it
     4.Knows an advantage to debt financing is that the interest on a business loan is tax deductible
     5.Knows a disadvantage to debt financing is that high interest rates can make borrowing very expensive
     6.Knows that a disadvantage to debt financing is the limitations or restrictions that lenders may put on loans
   Benchmark 4.Knows major types of loans used to finance a business (e.g., short-term loans, intermediate term loans, long-term loans)
    Knowledge/skill statements
     1.Knows major types of loans used to finance businesses
     2.Understands the concept of short-term loans
     3.Understands the concept of intermediate term loans
     4.Understands the concept of long-term loans
   Benchmark 5.Knows the financial statements a lender would evaluate when considering whether to grant a loan to an entrepreneur (e.g., projected income statement, cashflow statement, balance sheet)
    Knowledge/skill statements
     1.Knows the financial statements evaluated by a lender when considering to grant a loan to an entrepreneur
     2.Knows that a lender would evaluate projected income statements when considering whether to grant a loan to an entrepreneur
     3.Knows that a lender would evaluate cashflow statements when considering whether to grant a loan to an entrepreneur
     4.Knows that a lender would evaluate balance sheets when considering whether to grant a loan to an entrepreneur