Reference no: EM133333666

CASE SCENARIO - FINANCE / RAISING CAPITAL

In today's uncertain times, it is a challenge for small business to access finances from banks.

Jane and Jack have a long-standing tour company business based in Queensland. Due to COVID19, they lost a lot of revenue. Prior to COVID19, the business was running at a profit though after March 2020, they suffered a loss and previous lenders wouldn't advance further sums, while creditors were becoming impatient for payments. They believed there was a way forward, if only the immediate pressure could be relieved.

After negotiating with their bank manager, they secured a loan for $100,000 that could get them through the year. Importantly, it allowed them to consolidate the existing debts, and drastically reduced stress levels.

They also restructured the business; along with the injection of cash it has improved the outlook for Jane and Jack's company, providing borders remained open during the key holiday periods. They have a clear model, and a clear budget. As the focus in now on the future, rather than the calls from creditors, it has been great to see sales exceeding targets for the last months.

QUESTIONS

What should Jane and Jack do if the decide to sell the business or close the business? what's the advantage and disadvantage?