2.1.2 Flashcards
What are the 6 sources of external finance?
- Family and friends
- Banks
- Peer-to-peer funding
- Business angels
- Crowd funding
- Other business
What are the 7 methods of external finance?
- Loans
- Share capital
- Venture capital
- Overdrafts
- Leasing
- Trade credit
- Grants
What is meant by external finance?
Capital raised from outside of the business
What is family and friends?
Investment from people known to the entrepreneur
What are banks?
Financial institutions that are licenced to take deposits, pay interest, make loans and act as an intermediary in financial transactions
What is peer-to-peer funding?
The practise of an individual lending to other individuals with whom there is no relationship or contact
What are business angels?
Wealthy individuals make personal investments into start-up businesses in return for a share of the business
What is crowd funding?
Raising finance from a large number of people each investing different, often small, amounts of money
What are other businesses?
When businesses with healthy cash balances look to invest in other businesses
What are loans?
A set amount of money provided for a specific purpose, to be repaid with interest, over a set period of time
What is share capital?
Finance raised from the sale of shares
What is venture capital?
Investment from an established business into another business in return for a percentage equity in the business
What are overdrafts?
The facility to overspend on a current account up to an agreed sum
What is leasing?
Allowing a business to benefit from the use of an asset without owning it or buying it outright
What is trade credit?
Paying suppliers a period of time after the goods or services have been received
