Page 27 - BUSINESS STUDIES FORM 5

Student's Book Form Five

2. Secured loans seem to be most preferred by enterprises as the
common way used for financing due to some of the following
reasons:
(a) They are a long-term source of finance for business
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enterprises.
(b) They can have full control over the money after being
approved for the loan.
(c) They can borrow any amount of money depending on the
collateral.

3. Some of the reasons for the bank refusing to lend money to
Mr. Baruani after all his properties were burnt by fire including
products are as follows:
(a) Lack of collateral or security;
(b) Unproven business as it has been burnt by fire; and
(c) Inconsistency of the business cash flow.

Possible answers for Revision Exercise

1. The following are some of the advantages of financing
medium-sized businesses:
(a) Enables the business to expand;
(b) Meeting unexpected expenditures to business;
(c) Facilitate the business to buy new assets or
equipment; and
(d) Increase the working capital of the business.

2. The key features of a medium-sized business are well
explained in this student’s textbook.
3. Majuto used a grant as a source of finance. One of the
advantages of this source is that it is debt-free. However,
it is bureaucratic in application, it contains conditions for
using it as intended when applying.

21 Business Studies for Advanced Secondary Schools

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