Student Learning Objectives - Missouri FFA and Agriculture ...



AP5Agriculture Management, Economics, & SalesObtaining Financing for an AgribusinessUnit: Agribusiness Planning & Analysis Lesson Title: Obtaining Financing for an AgribusinessStandards ABS.04.01.01.b. Manage assets, including credit, for agribusiness goal achievement.ABS.04.01.02.c. Evaluate characteristics of lines of credit, loan terms and alternatives in sources of capital.Missouri Personal Finance SC.5 Compare business vs. consumer credit sources.Missouri Personal Finance SC.6 Evaluate terms and conditions of credit cards and consumer loans.Missouri Personal Finance SC.7 Evaluate factors that affect creditworthiness.Missouri Personal Finance SC.10 Propose ways to avoid or correct credit card SS.ELA-Literacy.W.11-12.2?Write informative/explanatory texts to examine and convey complex ideas, concepts, and information clearly and accurately through the effective selection, organization, and analysis of SS.ELA-Literacy.SL.11-12.1?Initiate and participate effectively in a range of collaborative discussions (one-on-one, in groups, and teacher-led) with diverse partners on grades 11–12 topics, texts, and issues, building on others’ ideas and expressing their own clearly and persuasively.Student Learning ObjectivesSlide 2 in AP5 Obtaining Financing for an Agribusiness Lesson ObjectiveAfter completing the lesson on obtaining financing for an agribusiness, students will demonstrate their ability to apply the concept in real-world situations by obtaining a minimum score of 80% on an Obtaining Financing for an Agribusiness Interview.Enabling ObjectivesAs a result of this lesson, the student will…Define three aspects of business financing, identify and describe three sources of business financing, and illustrate two key items a business should provide to secure a loan. Describe the 5 C’s of Credit, identify how a FICO score is calculated, and compare and contrast the four kinds of credit.Time: Approximately 140 minutesList of ResourcesBank Rate. (2014). Credit Card Calculator. Retrieved from . (2013). Types of Credit. Retrieved from Isaac Corporation. (2001-2014). myFico. Retrieved from Trade Commission. (n.d.). Consumer Information, Credit and Loans. Retrieved from . Fico Score. (n.d.). In Investopedia. Retrieved from: Consumer Agency of Canada. (n.d.). Model Credit Card Application. Retrieved from Materials Laboratory. (1997).?Agribusiness Sales, Marketing, and Management Instructor Guide. Columbia, MO: University of Missouri.Missouri Center for Career Education. (2006). Missouri Personal Finance Curriculum. Retrieved from R., Wood C. (1997).??Agribusiness Sales, Marketing, and Management Student Reference. Columbia, MO: Instructional Materials Laboratory.VISA. (2000-2014). Practical Money Skills for Life. Retrieved from of Tools, Equipment, and SuppliesAP5 PowerPoint PresentationAP5 Activity Sheet and Evaluation PacketNote cards or small sheets of paper for review activity5 sheets of flip chart paper or large sheets of paper1 marker for each student Key TermsSlide 3 in AP5 Obtaining Financing for an Agribusiness The following terms are presented in this lesson (shown in bold italics):Business FinancingCapacityCapitalCollateralCharacterConditionsFICO ScoreInstallmentRevolvingSecuredUnsecuredInterest Approach: Use an interest approach that will prepare the students for the lesson. Teachers often develop approaches for their unique class and student situations. A possible approach is included here.Slide 4 in AP5 Obtaining Financing for an AgribusinessFinancing – What Is It? Hang flip charts or large pieces of paper around the room – one for each of the following: 1) Financing, 2) What does it take to get financing? 3) Who gives financing? 4) What do we need to have prepared to receive financing? 5) What are some uses of financing? Give each student a marker, and have them travel around the room for 4-5 minutes jotting down answers to each of these questions on the corresponding poster. After students have returned to their seats, revisit each poster as a class circling the top notch responses and crossing out those the class feel doesn’t really apply. Conclude interest approach with an introduction to the objectives covered within this lesson.Summary of Content and Teaching Strategies484255962865005228639679450055689506794500Objective 1: Define three aspects of business financing, identify and describe three sources of business financing, and illustrate two key items a business should provide to secure a loan. Teaching StrategiesRelated ContentTie in the discussion from the interest approach when introducing the definition of business financing. Slide 5 in AP5 Obtaining Financing for an AgribusinessAsk students, “Where might a business owner go to obtain financing?” Complete chart AP5.1 together as PowerPoint slide is discussed.Slide 6-7 in AP5 Obtaining Financing for an AgribusinessFacilitate a discussion on what students think they or a business owner would need to provide in order to secure a loan.Slide 8 in AP5 Obtaining Financing for an AgribusinessBusiness financingEconomic activity that helps businesses, organizations and production agriculture secure cash for short-term operating needs or long-term investment decisionsGood financial management involves borrowing only the appropriate amount of money needed Involves shopping around to get the best interest rate possibleYoung entrepreneurs wanting to start a business requiring large inventories or large capital investments may face challenges in obtaining a loan, so it is recommended to start small – Once a financial institution can confirm a history of good business management, they are more likely to lend a business moneyEven if financing is not required to start a business, establishing a line of credit is important when running a business – A good credit history helps make it possible to obtain financing, if and when it is neededSources of business financing Farm Credit System – Provides short, intermediate and long-term loans for land, equipment, inventory, business assets, and operating loans for production agriculture and agribusinessesCommercial Banks – Offer short-term and long-term loans and a payment schedule that requires a single payment or periodic payments of interest and principal; Loan money for real estate, inventory, or capital assetsSavings and Loans – Primarily set up for long-term use for real estateGovernment Agencies – Farm Service Agency – Provides direct and government-guaranteed farm loans to persons engaged in agricultural production who will be owner(s) or operators of an agricultural production operation or facility when the loan is closed; Makes loans for farm ownership, soil and water conservation improvements, operating expenses, and emergency purposes; Small Business Administration – Primarily guarantees a certain percentage of short- and long-term loans made by private lenders to entrepreneurs and small businessesInsurance Companies – Allow individuals to borrow against the cash surrender value of their life insurance policy to make purchases; Short- and long-term goalsVenture capital – Money that can be invested in the ownership of a business; May involve selling stock on the open market to investors or taking on partnersDealers/Suppliers – Loan almost exclusively on the product the dealer is selling: Cars, tractors, feed, fertilizer, greenhouse, etc.Individuals – Loaned primarily for the sale of real estate with owner financing personal loans to relations and friendsWhat must a business provide to secure a loan?Current and historical financial statements; historical tax returns or Profit and Loss statements – typically 3-5 years; Depending on size and complexity, accountant prepared statements for larger accounts may be necessary - Individual or business’s credit history; History of established business – Income and expenses; History of individual(s) starting a business – Experience and trainingBusiness and Capital plansProposed collateral to secure the business loanCash Flow of the business – Sum of the Cash Flow from all activities including operating, investing and financing activitiesMarketing plan with market position statementsBusiness ResumeBusiness records to support past production, scope, inventory turns, account management485017978740005236845894860055987958186600Objective 2: Describe the 5 C’s of Credit, identify how a FICO score is calculated, and compare and contrast the four kinds of credit.Teaching StrategiesRelated ContentTie in content of objective 1, explaining that “credit” was a determining factor in obtaining financing. Next, facilitate a discussion on how students think a loan institution could determine if they, or a business, were worthy of being lent credit. Introduce 5C’s of CreditSlide 9 in AP5 Obtaining Financing for an AgribusinessSlide 10 in AP5 Obtaining Financing for an AgribusinessAsk students who has heard of a FICO score. Continue discussion based upon feedback or introduce FICO Score. (For additional information on the FICO score, visit .)Slide 11 in AP5 Obtaining Financing for an AgribusinessRemind students that credit history is one of the things examined to calculate the FICO score. Get their thoughts on what credit history is and how it is determined.Slide 12 in AP5 Obtaining Financing for an AgribusinessAsk students, “What kinds and sources of credit are available to you right now?” Listen for credit cards, consumer loans, auto loans, student loans, etc.Slide 13 in AP5 Obtaining Financing for an AgribusinessComplete AP5.2 in small groups or pairs as students research secured loans, unsecured loans, revolving loans, and installment loans.Have each pair or small group present their diagrams with an explanation comparing and contrasting the four types of loans. Complete AP5.3 to enhance/further discussion on the use of credit cards. Teachers may also want to complete one or more of the extended activities pertaining to credit cards in addition to AP5.3“5C’s” of CreditCapital – Measures the financial value of assets, liabilities, net worth, equity, liquidity, debt structure, and composite makeup of the business financial statement; Whether money will be available to pay off principal and interest when payments are dueCapacity – Measures the ability and efficiency of a business to generate sufficient revenue to meet operating expenses, owner withdrawals, income taxes, loan payments and capital replacement needsCollateral – Assets that can be offered as security for the loanCharacter/Management – Credit history and management experience of the entrepreneur Conditions – Loan amount(s) approved, terms (number of years, payment amounts, etc.), interest rate, etc.In addition, lenders also evaluateCapacity of Management to manage risk, debt levels, expansions, and human relations issuesCash flow leverageFICO ScoreA credit score lender’s use to determine applicant’s credit risk and whether or not to extend a loan.FICO is acronym for Fair Isaac Corporation – Creators of FICO scoreLooks at 5 areas – Payment history, current indebtedness, types of credit used, length of credit history, new creditRating agencies – Equifax, Transunion and ExperianScores range between 300 and 850 Score rating ranges – Above 700 indicates very good credit history; 680 – 699 indicates a good source; 640 – 679 average score; 620 – 639 below average; 580 – 619 low scoreWhat is an individual’s credit history?A record of an individual’s or company’s past borrowing and repayment behaviorWill list personal information, credit lines, currently in individual’s name, risk factors, late payments, and public records filedUsed by insurance companies, rental agencies, utility companies and others as an indicator of future performance; Typically rate charges based on FICO scoresKinds and sources of credit Secured – Guaranteed by collateralUnsecured – No collateral needed; Based on credit score and ability to repayRevolving – Repeated transactions up to a maximum limit; Monthly payments paid based upon monthly charges; Interest added to remaining balance at end of month; Credit cards Installment – Loan made for fixed amount of time; Repaid in fixed monthly installments; Interest charges included in monthly payments: Car loans, home loans, etc.Review/SummarySlide 14 in AP5 Obtaining Financing for an AgribusinessMoney is required in order to start and run a business. This money is generally obtained through loans from a person or financial institution. Different sources of financing may be used, and different types of loans may be obtained. However, in order to receiving this financing, individuals and businesses must supply the lending institution with the necessary documents to measure credit score and the individual’s ability to repay the loan.Review: Slide 15 in AP5 Obtaining Financing for an AgribusinessUse PPT slide to have students answer review questions orally or individually on a sheet of notebook paper.Slide 16 in AP5 Obtaining Financing for an AgribusinessExit cards: Students will answer the following questions on a note card or small slip of paper and hand to teacher as they exit:What did you learn today about obtaining financing for a business?What questions do you still have about obtaining financing for a business?ApplicationExtended ActivitiesFurther investigate the pros and cons of credit cards. Have each student locate a YouTube video about credit cards. Be sure the teacher approves each video. A few good examples are “Credit Card Debt – A Student’s Story,” “Dave Ramsey on Credit Card Debt,” and “Credit Card Debt Explained with a Glass of Water.” After watching the video, have students write a personal reflection (at least 3 paragraphs) based upon content of this lesson and content of the video. Next, have students read the comments on the YouTube video and choose three in which to write responses. The responses can be added to the bottom of the personal reflection instead of online if the teacher prefers. With parent permission, allow students to have their FICO scores calculated using one of the many free online sources available. Upon receiving scores, have students identify three things that surprised them, three things they need to improve upon, and how they plan to make those positive changes.Find articles related to credit, FICO score, credit cards, loans, etc. on Yahoo Money, MSN Money, , CNN Money, or the Consumer Information page of . Give students a specific topic from above, have them locate one or two articles about the topic, and upon reading and examining the articles create five tweets (no more than 140 characters) to get across the main points of the articles. Post these tweets on sheets of paper and place around the room for classmates and other students to observe.Obtain a sample credit card application from . Examine each piece of the application, paying close attention to the terms and conditions of the credit card. For an additional individual assignment, assign each student a different term or condition to research. When finished, have students create a one-line “tag line” on an 8x11 poster relating the positives and/or negatives of their specific term or condition. Arrange these around the room for classmates and other students to observe.Set up individual meetings for each student with a loan officer to discuss their Supervised Agricultural Experience Program and record book. Have students prepare questions for the loan officer about their ability to obtain financing for their SAE, improvements they should make before applying for a loan, positives the loan officer sees today, etc. Share these conclusions and a summary of the meeting with the teacher during the next SAE visit. If a loan officer is not available to meet individually with each student, invite him/her to class to meet with all students at the same time. Students will need to vary their questions as the loan officer will not want to discuss specific money issues in an open discussion.56032899588500EvaluationObtaining Financing for an Agribusiness Interview AP5.4Alternate - Paper-pencil Quiz Evaluation AP5.5Answers to EvaluationEvaluation AP5.4Answers will vary. Use scoring guide on AP5.4 to assess student work. Alternate Evaluation AP5.5BAnswers may include any three of the following: individual’s credit history, information on assets to be used for collateral, information on cash flow to determine whether the business can make interest and principal payments on the loan, history of the individual or individuals starting a business, including experience and training, and the business ideaProvide short, intermediate and long-term loans for land, equipment, inventory, business assets, and operating funds for production agriculture and agribusinessCapital – Measures the financial value of assets, liabilities, net worth, equity, liquidity, debt structure, and composite makeup of the business financial statement; Whether money will be available to pay off principal and interest when payments are dueCapacity – Measures the ability and efficiency of a business to generate sufficient revenue to meet operating expenses, owner withdrawals, income taxes, loan payments and capital replacement needsCollateral – Assets that can be offered as security for the loanCharacter/Management – Credit history and management experience of the entrepreneur Conditions – Loan amount(s) approved, terms (number of years, payment amounts, etc.), interest rate, etc.A credit score lender’s use to determine applicant’s credit risk and whether or not to extend a loan; FICO scores for other users (utility, insurance and rental companies) use the credit score for ratingsLooks at 5 areas – payment history, current indebtedness, types of credit used, length of credit history, new credit700 and above ................
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