There are many method of raising money for the private sector such as repayment plans and interest only plans. Securing an investment or making an investment you must look at the risks and the securities that come with it.
Raising money for private sector development projects
Investment is giving up money to receive benefits. From this investment you can receive income on a short or long term period or capital gain.
Equity can be if someone invested in a business short or long term in return they can get a share of the ownership in some cases they can control the business. Here are a few examples:
* Retained earnings
* Rights issues
A debt is when a person borrows money from a person or a company that needs to paid back because of a contractual or verbal agreement. Here are a few examples:
* Short and long term loans – generally unsecured
* Commercial mortgages – loans secured against commercial property
To raise money for the private sector development projects, you must look at the risks and security. Sometimes investors are persuaded to invest, they would be offered a big return but it is up to them if they want to take the risk. Risk can also relate to future performances. For this project the investor would like to see security such as:
* Security of capital
* Security of income
* Regularity of income
The private sector can invest in houses if they have the capital of 500 thousand pounds. They would be able to buy two big houses for 250 thousand pounds. They can decide what kind of plan they can do such as repayment plan or interest only plan. if the two houses were up for rent and they did an interest plan only they will be receiving a lot of money monthly, because the interest only plan is cheaper than the repayment plan this because with the repayment plan you will be paying off the capital and in the interest, but with the interest plan...