MAKALAH B.INGGRIS 2

EQUITY FINANCING and DEBT in ISLAM

MAKALAH

Disusun Untuk Memenuhi Tugas

Mata Kuliah : Bahasa Inggris 2

Dosen Pengampu : Taranindya Zulhi Amalia, M.Pd

 

Disusun Oleh :

1.      Mohammad Kamal Zamroni          ( 212229 )

2.      Irfayati  Lutfiyana                          ( 212230 )

3.      Indri Afiyanti                                   ( 212231 )

4.      Siti Uswatun Kasanah                     ( 212234 )

5.      Laila Fitriyana                                 ( 212235 )

6.      Van Ali Akhsan                               (     -       )

SEKOLAH TINGGI AGAMA ISLAM NEGERI KUDUS

JURUSAN SYARI`AH  / EI – REGULER

TAHUN AKADEMIK 2012 – 2013

CHAPTER I

A.    Introduction

Debt vs equity financing is one of the most important decisions facing managers who need capital to fund their business operations. Debt and equity are the two main sources of capital available to businesses, and each offers both advantages and disadvantages.

B.     The Question Abbreviation

1.      What is equity financing?

2.      What is debt financing?

3.      What is the rulling of equity financing and debt in Islam?

4.      What are the advantages and disadvantages of both equity financing and debt?

CHAPTER II

Discussion

A.    Equity Financing

Equity financing is money acquired from the small business owners themselves or from other investors.

Stockholders purchasing shares in a corporation, for instance, create equity financing, as do angel investors who provide funding. Small business owners may invest their own funds into their businesses, funds gleaned from inheritance, savings, or even the sale of personal assets which then serves as equity financing for the business.

Besides contributing to a healthy balance sheet, making a personal investment that serves as equity financing in a business is often necessary to attract other investors and/or lenders. If you, as the small business owner, are not prepared to put any of your personal funds into the business, what does that say to anyone else who might be thinking of investing in the business - or that you're asking for a business loan? Investors and lenders like to see an equity financing contribution of 25 to 50 percent.

Generally, investors and lenders take your equity financing contribution as a sign of your commitment to the business. They want to see that you are willing to share the risks, as well as the rewards.

While there is a great deal of talk about angel investors as sources of equity financing, the main sources of equity financing for small businesses continue to be family and friends.

B.     Debt Financing

Debt financing takes the form of loans that must be repaid over time, usually with interest. Businesses can borrow money over the short term (less than one year) or long term (more than one year). The main sources of debt financing are banks and government agencies, such as the Small Business Administration (SBA). Debt financing offers businesses a tax advantage, because the interest paid on loans is generally deductible. Borrowing also limits the business's future obligation of repayment of the loan, because the lender does not receive an ownership share in the business.

However, debt financing also has its disadvantages. New businesses sometimes find it difficult to make regular loan payments when they have irregular cash flow. In this way, debt financing can leave businesses vulnerable to economic downturns or interest rate hikes. Carrying too much debt is a problem because it increases the perceived risk associated with businesses, making them unattractive to investors and thus reducing their ability to raise additional capital in the future.

C.    The Rulling of Equity Financing and Debt in Islam

alam terminologi fiqh mu’amalah, pinjaman yang mengakibatkan adanya utang disebut dengan “qard” (قرض). Qard (قرض) dalam pengertian fiqh diartikan sebagai perbuatan memberikan hak milik untuk sementara waktu oleh seseorang pada pihak lain dan pihak yang menerima pemilikan itu diperbolehkan memanfaatkan serta mengambil manfaat dari harta yang diberikan tanpa mengambil imbalan, dan pada waktu tertentu penerima harta itu wajib mengembalikan harta yang diterimanya kepada pihak pemberi pinjaman (Jamali, 1992: 162).

Kedua, dalam bahasa perbankan pemberian utang atau pembiayaan disebut dengan “kredit”. Kata “kredit” secara kebahasaan berasal dari kata credo yang dalam pengertian keagamaan berarti kepercayaan. Adapun pengertian kata credo yang terkait dengan masalah financial adalah memberikan pinjaman uang atas dasar kepercayaan (Karim, 2001: 109).

Utang dalam pengertian masyarakat berarti menerima pinjaman dari pihak lain yang harus dikembalikan sesuai dengan perjanjian yang dilakukan ketika transaksi. Secara umum, ketiga istilah di atas tidak mempunyai pengertian yang berbeda-beda. Adanya perbedaan istilah antara utang, kerdit, dan dain hanya perbedaan bahasa saja yang dalam pengertian umum masyarakat tidak berbeda. Sedangkan perbedaan antara pinjaman, pembiayaan, dan qard (قرض) juga demikian.

Selain dasar hukum yang bersumber dari al-Qur’an sebagaimana di atas, pemberian utang atau pinjaman juga didasari Hadiŝ Rasulullah yang diriwayatkan oleh Ibnu Majah sebagai berikut;

ما من مسلم يقرض مسلما قرضا مرتين إلا كان كصدقتها مرة

Barang siapa yang memberikan pinjaman pada seorang muslim dua kali maka tidak lain pahalanya kecuali seperti pemberian shadaqah satu kali.

Selanjutnya, dalam transaksi utang piutang Allah memberikan rambu-rambu agar berjalan sesuai prinsip syari’ah yaitu menghindari penipuan dan perbuatan yang dilarang Allah lainnya. Pengaturan tersebut yaitu anjuran agar setiap transaksi utang piutang dilakukan secara tertulis. Ketentuan ini terdapat dalam surat al-Baqarah ayat 282 sebagai berikut;

يأيها الذين ءامنوا إذا تداينتم بدين إلى أجل مسمى فاكتبوه و ليكتب بينكم كاتب بالعدل و لا يأب كاتب أن يكتب كما علمه الله فليكتب

Hai orang-orang yang beriman, jika kamu bertransaksi atas dasar utang dalam waktu yang telah ditentukan, tulislah. Hendaklah seorang penulis diantaramu menulis dengan benar, dan janganlah dia enggan menulisnya sebagaimana yang telah diajarkan Allah. (al-Baqarah ayat 282).

Di sisi lain, Allah memberikan aturan yang tegas dalam utang piutang yang merupakan bagian dari transaksi ekonomi (mu’amalah maliyah). Ketegasan aturan transaksi ekonomi tersebut tercermin dalam firman Allah dalam surat an-Nisa’ ayat 29 sebagai berikut;

يأيها الذين ءامنوا لا تأكلوا أموالكم بينكم بالباطل إلا أن تكون تجارة أن تراض منكم و لا تقتلوا أنفسكم إن الله كان بكم رحيما

Wahai orang-orang yang beriman, janganlah kamu memakan harta yang beredar diantaramu secara bathil, kecuali terjadi transaksi suka sama suka. Jangan pula kamu saling membunuh. Allah sangat saya kepadamu semuanya. (Dahlan, 2000: 146).

Salah satu transaksi yang termasuk baţil adalah pengambilan riba. Riba berdasarkan penjelasan para mufassir, baik dalam bentuk definisi maupun gambaran praktis di masa Jahiliyyah, menurut Qardhawi (2001: 76-78), maka riba yang maksud dapat diidentifikasikan sebagai berikut:

1. Riba itu terjadi karena transaksi pinjam meminjam atau hutang piutang

2. Ada tambahan dari pokok pinjaman ketika pelunasan

3. Tambahan dimaksud, dimaksudkan terlebih dahulu

4. Tambahan itu diperhitungkan sesuai dengan limit waktu peminjaman.

D. The Advantages And Disadvantages Of Both Equity Financing And Debt

Equity finance can sometimes be more appropriate than other sources of finance, eg bank loans, but it can place different demands on you and your business.

The main advantages of equity finance are:

·     The funding is committed to your business and your intended projects. Investors only realise their investment if the business is doing well, eg through stock market flotation or a sale to new investors.

·     You will not have to keep up with costs of servicing bank loans or debt finance, allowing you to use the capital for business activities.

·     Outside investors expect the business to deliver value, helping you explore and execute growth ideas.

·     The right business angels and venture capitalists can bring valuable skills, contacts and experience to your business. They can also assist with strategy and key decision making.

·     In common with you, investors have a vested interest in the business' success, ie its growth, profitability and increase in value.

·     Investors are often prepared to provide follow-up funding as the business grows.

The principal disadvantages of equity finance are:

·     Raising equity finance is demanding, costly and time consuming, and may take management focus away from the core business activities.

·     Potential investors will seek comprehensive background information on you and your business. They will look carefully at past results and forecasts and will probe the management team. Many businesses find this process useful, regardless of whether or not any fundraising is successful.

·     Depending on the investor, you will lose a certain amount of your power to make management decisions.

·     You will have to invest management time to provide regular information for the investor to monitor.

·     At first you will have a smaller share in the business - both as a percentage and in absolute monetary terms. However, your reduced share may become worth a lot more in absolute monetary terms if the investment leads to your business becoming more successful.

·     There can be legal and regulatory issues to comply with when raising finance, eg when promoting investments.

Advantages of Equity Financing:

·         You can use your cash and that of your investors when you start up your business for all the start-up costs, instead of making large loan payments to banks or other organizations or individuals. You can get underway without the burden of debt on your back.

·         If you have prepared a prospectus for your investors and explained to them that their money is at risk in your brand new start-up business, they will understand that if your business fails, they will not get their money back.

·         Depending on who your investors are, they may offer valuable business assistance that you may not have. This can be important, especially in the early days of a new firm. You may want to consider angel investors or venture capital funding. Choose your investors wisely!

Disadvantages of Equity Financing:

·         Remember that your investors will actually own a piece of your business; how large that piece is depends on how much money they invest. You probably will not want to give up control of your business, so you have to be aware of that when you agree to take on investors. Investors do expect a share of the profits where, if you obtain debt financing, banks or individuals only expect their loans repaid. If you do not make a profit during the first years of your business, then investors don't expect to be paid and you don't have the monkey on your back of paying back loans.

·         Since your investors own a piece of your business, you are expected to act in their best interests as well as your own, or you could open yourself up to a lawsuit. In some cases, if you make your firm's securities available to just a few investors, you may not have to get into a lot of paperwork, but if you open yourself up to wide public trading, the paperwork may overwhelm you. You will need to check with the Securities and Exchange Commission to see the requirements before you make decisions on how widely you want to open up your business for investment.

If you decide that you do not want to take on investors and want total control of the business yourself, you may want to pursue debt financing in order to start up your business. You will probably try to tap your own sources of funds first by using personal loans, home equity loans, and even credit cards. Perhaps family or friends would be willing to loan you the necessary funds at lower interest rates and better repayment terms. Applying for a business loan is another option.

Advantages of Debt Financing

·         Debt financing allows you to have control of your own destiny regarding your business. You do not have investors or partners to answer to and you can make all the decisions. You own all the profit you make.

·         If you finance your business using debt, the interest you repay on your loan is tax-deductible. This means that it shields part of your business income from taxes and lowers your tax liability every year. Your interest is usually based on the prime interest rate.

·         The lender(s) from whom you borrow money do not share in your profits. All you have to do is make your loan payments in a timely manner.

·         You can apply for a Small Business Administration loan that has more favorable terms for small businesses than traditional commercial bank loans.

Disadvantages of Debt Financing

·         The disadvantages of borrowing money for a small business may be great. You may have large loan payments at precisely the time you need funds for start-up costs. If you don't make loan payments on time to credit cards or commercial banks, you can ruin your credit rating and make borrowing in the future difficult or impossible. If you don't make your loan payments on time to family and friends, you can strain those relationships.