2.1.2 External finance Flashcards
1
Q
What is external finance?
A
The funds generated and used outside the business to finance its operations
2
Q
What are the 7 methods of external finance?
A
Loans
Share capital
Venture capital
Overdrafts
Leasing
Trade credit
Grant
3
Q
What are the 6 external sources?
A
Family and friends
Bank loans
Peer-to-peer lending
Business angels
Crowdfunding
Other businesses
4
Q
What is peer to peer lending?
A
A platform that allows businesses to borrow and lend sums of money
5
Q
What are business angels?
A
high net-worth individuals, who directly invest in new, growing businesses
6
Q
What are the 2 pros of external finance?
A
-Access to larger sums of finance
-Brings knowledge and experience
7
Q
What are the 3 cons of external finance?
A
-Loss of control
-Business plan often needed
-Intrest, risk of debt
