2.1.1 Sources Of Finance Flashcards
What are the 3 sources of internal finance
- Personal savings
- Retained profit
- Sale of assets
What are the 6 sources of external finance
- Bank
- Friends and family
- Business angles
- Crowd funding
- Other businesses
- Peer 2 peer lending
What are the 7 methods of external finance
- Share capital
- Loan
- Grant
- Leasing
- Overdraft
- Trade credit
- Venture capital
What is a bank loan
A large sum of money that can be payed back in around 20 years.
However, if inflation increases the sum that needs to be replayed goes up, interest rates have to be payed
What is a mortgage
A long term loan that is used for properties
However, if inflation increases the sum that needs to be replayed goes up, interest rates have to be payed
What is an overdraft
Small amount of money payed back within the year
Has high interest rates
What is leasing
A monthly payment, the asset dosent belong to you.
What is a grant
A large sum of money that is given to firms to satisfy quite specific terms of conditions
What is trade credit
Allows you to buy and make use of assets/ raw materials immediately but you can pay back later.
What is a raised share capital
Increasing he number of shares available to buy.
What is venture capital
When companies that have big sums of money try to make it grow, they put the money into smaller businesses to help them to grow so that they get more money in return.
What is personal savings
Owners invest their own money into the business
What is retained profit
Unspent profit that has been generated in previous spending years
What is sale of assets
Selling unused assets for a profit
What are factors that influence the choice of finance
How much money is needed
Ability to pay it back
Existing financial circumstances
The purpose of the required finance
The type of business you are
