This continues our Everyday Conversations about business.
Chimwemwe: Thanks for meeting me for coffee. I know you’re busy, but I would appreciate some financial advice.
Diego: Of course. I’m always happy to help. What’s the issue?
Chimwemwe: Well, I want to start my own company, but I don’t have much capital. What are my options?
Diego: One option is to take out a loan. You want to make sure you get a good interest rate and that the financial institution is stable and trustworthy.
Chimwemwe: I’ve looked at different lenders and have found some good ones. But part of me doesn’t want to rely on borrowing.
Diego: If your business seems like it will be very lucrative, you may be able to get a venture capitalist to invest in your business.
Chimwemwe: That’s a good idea. Since you work in finance, would you happen to know of anyone I can talk to about this?
Diego: I think I can get you at least a couple of contacts.
Chimwemwe: That’s fantastic! Thank you.
Now let’s review the vocabulary
Capital is money, property, etc., that is used for investment or for starting a business.
A loan is money that someone or a company/corporation borrows from a financial institution or an individual for a period of time with a promise that it will be paid back; often the person must pay interest.
An interest rate is the percentage of the amount of money borrowed that the borrower must pay to the lending institution in addition to the amount of the loan.
A financial institution is a company such as a bank or investment company that provides financial services like loans, investments, etc.
Lenders are financial institutions or individuals who lend money that is then paid back with interest.
Borrowing means taking money from a bank or other financial institution with the intention of paying it back over a specified period of time, usually with interest.
Lucrative, especially when said of a business or job, means producing a lot of money or profit.
A venture capitalist is a person or financial organization that invests in new businesses or the expansion of small companies, becoming a partial owner of the business and with the goal of making a large profit.