| Course | BU 423 Entrepreneurial Strategy |
|---|---|
| Unit | Unit 7 |
| Paper type | Funding option comparison |
| Length | About 890 words, 6 pages |
| Format | APA 7 student paper |
| School | Herzing University |
| Program | BS in Business Management |
| Updated | September 2026 |
Free sample paper for BU 423 Unit 7
Two Loans, a Bank Lien or a Dealer's Thirty Percent: A Funding Option Comparison for the $100,000 a Composite Mobile Hose Van Needs to Reach Its Second Spring
Student Name
Business, Herzing University
BU 423: Entrepreneurial Strategy
Instructor Name
April 8, 2026
Two Loans, a Bank Lien or a Dealer's Thirty Percent: A Funding Option Comparison for the $100,000 a Composite Mobile Hose Van Needs to Reach Its Second Spring
What the Venture Needs and Why
The runway sheet for Fieldside Hydraulics, the composite mobile hose venture in this course, found that $77,000 of opening costs was only part of the need. With $90,000 raised, the slow sales case ran out of cash in February; with $100,000 it reached the second spring. The venture is at the pre-launch stage, with no revenue, a founder who has $25,000 in savings, and a validated problem among central Iowa contractors but no signed customers yet. It needs $100,000: about $38,000 for a used van, $39,000 for equipment, inventory and launch costs, and about $23,000 of working capital to carry the first summer's receivables and the first winter. This comparison sets three routes to that amount side by side under the same headings.
Route A: A Microloan Plus an Equipment Loan
The founder borrows $50,000 through the SBA microloan program and $38,000 from a local credit union against the van, and puts in $12,000 of savings, keeping $13,000 back. Microloans are made through nonprofit, community-based intermediaries that also provide management and technical assistance, up to $50,000, with terms of up to seven years and rates generally between 8 and 13 percent (U.S. Small Business Administration, n.d.). The composite case assumes 10 percent over seven years, which gives a payment of about $830 a month. The equipment loan is assumed at 9 percent over six years, about $685 a month, secured by the van.
What the lenders want is repayment and, in practice, the founder's personal promise behind it; Robb and Robinson (2014) found that new firms rely heavily on owner-backed loans, so a personal guarantee should be expected. Approval requires a business plan and cash projections, which the earlier units already supply, and the composite intermediary quotes about six weeks. The founder keeps full ownership and control.
Route B: One Bank Term Loan
The founder borrows $75,000 from a community bank and puts in all $25,000 of savings. Because the venture has no operating history, the composite bank will lend only with a lien on the founder's home as collateral. The assumed terms are 11 percent over seven years, about $1,284 a month. Approval is quoted at eight to ten weeks. The founder keeps full ownership, but household savings are gone and the home is pledged.
Route C: A Dealer Takes a Stake
The founder's former employer, one of the two equipment dealers in the area, offers $75,000 for 30 percent of the company, and the founder adds $25,000. There are no monthly payments. The dealer asks for three things in return: Fieldside takes referrals only from its parts counters and not from the rival dealer's, the dealer has the right to match any offer if the founder ever sells, and the dealer must approve any spending above $10,000. The offer values the company at $250,000 after the investment, which is generous for a business that owns a van and has no customers yet. The papers could be signed within three weeks.
The Routes Side by Side
The table compares the three on cost, speed, control and the obligation that outlasts the funding. Monthly payments matter more than the interest totals, because the runway sheet was built without any repayment, and every dollar of payment comes out of the same thin cash.
| A: Microloan and equipment loan | B: Bank term loan | C: Dealer equity | |
|---|---|---|---|
| Money raised | $88,000 borrowed, $12,000 savings | $75,000 borrowed, $25,000 savings | $75,000 invested, $25,000 savings |
| Monthly payment | About $1,515 | About $1,284 | None |
| Interest over the term | About $31,000 | About $32,900 | None; 30% of all future profit and sale value |
| Time to funds | About 6 weeks | 8 to 10 weeks | About 3 weeks |
| Founder's control | Full | Full | Shared: approval over $10,000, right to match a sale |
| What survives the funding | Payments for 6 to 7 years; personal guarantee | Payments for 7 years; lien on the home | A permanent partner and a single referral source |
| Break-even calls a month | About 25 | About 24 | About 19 |
| Slow case, $100,000 raised | Cash runs out in January unless the founder adds the $13,000 kept back | Cash runs out in February with no reserve left | Never runs out; about $6,400 in March |
Recommendation and What It Accepts
Route A is recommended. It keeps the founder in control and keeps $13,000 of savings outside the business, and the only asset pledged under the composite terms is the van, the kind of tangible asset that Cassar (2004) found makes start-ups more able to borrow at all. The intermediary's technical assistance is a small but real extra for a first-time owner. Route B costs about the same each month but takes every dollar the founder has and puts the family home behind a business with no history, which is a larger personal risk for a smaller loan.
Route C is the safest route for cash, and that should be said plainly: with no payments, the venture survives even the slow year with money left. It is rejected for three reasons. Thirty percent of every future profit and of any sale is a high price for a business whose risk falls sharply once its first year is behind it. The referral clause would tie the venture to one dealer, when the beachhead contractors buy from both. And a dealer that learns the hose business from inside the venture, with a right to match any sale, would be well placed to start its own van or to buy Fieldside cheaply.
Taking Route A means accepting three things. The venture needs about 25 calls a month in season to cover its costs and payments, not 19. In a slow year the founder's last $13,000 goes into the business around January, so the ten signed priority plans set as a condition in the business model unit become a condition of borrowing, not only of buying the van. And the founder signs a personal guarantee that outlives the business if it fails. The lenders, the dealer and every term in this comparison are composites; only the SBA program limits are published facts.
References
Cassar, G. (2004). The financing of business start-ups. Journal of Business Venturing, 19(2), 261-283. https://doi.org/10.1016/S0883-9026(03)00029-6
Robb, A. M., & Robinson, D. T. (2014). The capital structure decisions of new firms. Review of Financial Studies, 27(1), 153-179. https://doi.org/10.1093/rfs/hhs072
U.S. Small Business Administration. (n.d.). Microloans. https://www.sba.gov/funding-programs/loans/microloans
BU 423 Unit 7 instructions, in plain terms
The seventh unit of BU 423 typically asks students to compare two or three ways of financing the venture, often debt, equity and a third route such as a grant, crowdfunding or pre-sales. Prompts generally require the amount needed and its purpose, drawn from the earlier cost work, a description of each option, a comparison on cost, control, speed and obligations, and a recommendation with its trade-offs. Some ask for a simple valuation when equity is involved. Published program details, such as SBA loan limits, should be described in the lender's own terms and cited. Figures for rates and ownership belong to the composite case. Expect three to four pages with a comparison table in APA 7 and a clear statement of what the founder accepts.
How the BU 423 Unit 7 example is put together
The comparison opens with the venture's stage and the $100,000 need, broken into van, equipment and working capital from the runway sheet. Route A describes the microloan and equipment loan, citing SBA limits, then computes monthly payments. Route B describes a bank loan with a lien on the home. Route C sets out a dealer's offer for 30 percent, with its three conditions and implied valuation. All three use the same headings. A table then compares them on eight lines, including what happens to the slow sales case under each. The recommendation chooses Route A, explains why Route B risks more for less and why Route C, although safest for cash, gives up too much, and ends with three things the founder accepts.
Where the points sit in the BU 423 Unit 7 rubric
Herzing's funding rubric usually scores the statement of need, the description of each option, the comparison, the recommendation and the writing and citation quality. The need criterion rewards an amount carried over from earlier cost work rather than a round number. Option descriptions earn full points when each covers cost, requirements, timing and control in parallel form. The comparison is judged on whether the options are measured on the same dimensions, with cash effects included, not only interest totals. The recommendation scores highest when it names one route, gives reasons that connect to the venture's situation and states honestly what the chosen route costs. Instructors also credit accurate descriptions of real programs, which means citing the lender's published terms rather than guessing at them.
BU 423 Unit 7 help before you submit
Funding comparisons often lose points when the amount requested has no link to the startup cost or runway work. Another common weakness is comparing only interest rates while ignoring monthly payments, which are what actually strain a new venture's cash. Students also describe equity as free money, overlooking the ownership, control and obligations it brings. Some papers present three versions of the same option, such as three bank loans, which offers little real comparison. Others misstate real loan programs by guessing limits or terms. A frequent omission is saying what the founder gives up by choosing the recommended route. Finally, a recommendation that dismisses the safest option without explaining why looks careless; the sample says plainly what the rejected route did better.
Get a BU 423 Unit 7 example written to your instructions
Send the Unit 7 instructions and rubric posted in your BU 423 classroom, together with the funding requirement your earlier work established. We write a custom example that fixes the amount first, describes every route under the same headings, prices control alongside cash and names what the recommended route costs. First custom sample free, returned in 24 to 48 hours.
More BU 423 papers and business management samples
- BU 423 Unit 1: Opportunity screen
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- BU 423 Unit 3: Business model canvas write-up
- BU 423 Unit 4: Beachhead market definition
- BU 423 Unit 5: Customer acquisition path plan
- BU 423 Unit 6: Startup cost and runway sheet
- BU 423 Unit 8: Venture feasibility file
- BU 217 Unit 7: Real case analysis
- BU 231 Unit 7: Risk and mitigation paper
- BU 242 Unit 7: Service recovery analysis
- BU 245 Unit 7: Presentation with speaker notes
BU 423 Unit 7 questions, answered
How many funding routes should the comparison hold?
Three is the usual instruction and three is usually enough, provided they differ in kind rather than in name. A loan, an equity investment and a route involving neither, such as pre-selling to customers, produce a real comparison. Three variations on borrowing produce one. Where the assignment names the options, use exactly those and spend the space on the comparison instead.
Do I need to value the venture?
Only if the instructions ask, and if you do, treat the figure as an assumption of the composite case and show how you reached it. A percentage of ownership quoted without a valuation cannot be checked and tends to be the first thing queried. Where valuation sits outside the assignment, describe the equity route through control and obligations instead of arguing a number.
Is this assignment about real financing decisions?
It is coursework about a composite venture, and it should say so. Nothing in the file is written as advice anybody would act on, and figures for rates, terms or ownership belong to the case rather than to any market. Keep real offers, term sheets and family arrangements out of it, and describe published lending products only in the terms the lender publishes.
Where can I find a free BU 423 Unit 7 sample paper?
A full BU 423 Unit 7 funding option comparison is free on this page, with all three routes, the side-by-side table and margin notes. If your venture needs a different amount or your prompt names other options, share it and we draft a custom comparison free, usually within about two days.
Does BU 423 Unit 7 have to recommend a loan?
No. The rubric rewards a well-reasoned choice, not a particular route. The sample picks the microloan and equipment loan but states that dealer equity was safer for cash, and explains why ownership and the referral clause made it the weaker choice.