By Bridget Clark, SBA Credit Manager, Core Bank
The United States of America is known as the land of opportunity. For many Americans, their version of the American Dream includes owning and operating their own business. It takes a lot of planning, vision, capital, blood, sweat and tears to make those dreams a reality.
The 5th grade students at Christa McAuliffe Elementary School in Lenexa, Kansas were recently given the opportunity to learn how to start their own businesses, through the Caine’s Arcade Project. Core Bank associates were invited to attend and assist the students with obtaining financing to start their new business ventures.
Through the Caine’s Arcade Project, 5th grade students designed, created and ran their own arcade games by utilizing the principles of physics, geometry, measurement, design and economics. The students had to develop a business plan, determine how much the project would cost, and figure out how they were going to pay for the costs to make their unique arcade games. Their end goal was to learn how to successfully open their own business.
The students were divided into teams
Each team sat down with the Core Bank team to ask for a business loan. They explained their business plan in great detail, including:
- Total source and use of funds
- Capital they would put into the deal
- General cash flow projections from the proceeds from the sale of arcade games
- Any experience in building, developing or running a business (running lemonade stands and participation in robotics courses counted as industry experience)
- Offer up collateral to secure the loan (students offered up their cell phones, roller skates, bikes, trampolines and even their parents’ cars as collateral)
Location
One team in particular knew that location was key to getting the most customers for their arcade game, and decided to pay additional rent to ensure that their arcade game was the first at the entrance to the gym.
Loan
The loan amounts requested varied from $50 up to $100. At the end of the presentation, Core Bank had to determine if we would approve the loan (of course we did), determined what interest rate would be approved based off of the risk associated with the project, and a promissory note was signed by the students. The promissory note detailed how much the principal and interest payments would be.
No real money was actually distributed, but it gave the students the experience of learning what was required to obtain a small business loan from a bank. The students then proceeded with constructing their arcade games out of various materials, and had a real live arcade opened up for students and parents to play to raise real money for their 6th grade field trip next year.
These kids knew exactly what they wanted, and the planning involved was amazing!
The kids learned so much about what it takes to successfully present their business plan to the bank to obtain financing, along with actually building their arcade game and running their own business. Through Caine’s Arcade Project, the students were introduced to the American Dream of owning and operating their own business. Many of the students sent us thank you letters, thanking us for providing them with feedback and approvals for their small business loans. We were glad to help and enjoyed the experience!