1.3.4 - Sources of Finance Flashcards
List exampels of long term finance
- Personal savings of owners
- Venture capital
- Share capital
- Bank loans
- Retained profit
- Crowd funding
List examples of short term finance
- Trade credit
- Overdraft
Trade Credit:
A credit arrangement that is offered only to businesses by its suppliers
Overdraft:
Overdraft: A facility offered by a bank that allows an account holder to borrow money at short notice
Cheque:
A written order to a bank to pay an amount of money from an account holder’s account to a specified person
Venture Capital:
Money to invest in a business is sources from individuals, or groups of people, who wish to invest their own money into new businesses
Return on Investment:
Return on Investment: The amount of money that an investor gets back in return for investing in a business
Shareholders:
Investors who are part-owners of a company
Share Capital:
Money to invest in a business is raised by the business issuing shares that it then sells to those who wish to invest in the company
Credit Check:
Credit Check: A check on the financial status of a business or individual to ensure that the business or individual has a reliable credit history and does not have any existing outstanding debts
Security:
When the lender asks the borrower to put up an asset, such as a house, or a valuable item owned by the business
Asset:
Asset: Any item of value that a business owns, such as its machinery or premises
Guarantor:
A named person who guarantees to pay the repayments on a loan should the person who has taken out the loan not be able to make the payments
Retained Profit:
Money that a business keeps, rather than paying out to its shareholders
Long term finance
Finance exceeding one year.
