2.1.2. External Sources Of Finance

Question 1

Family and friends

Answer 1

-Provide extra start up capital necessary to start.
-May be by taking equity(shareholding) stake in a business set up a limited company

Question 2

Banks

Answer 2

-Where loan is provided, banks will insist on some collateral as security

Question 3

Peer to peer funding

Answer 3

-Relies on websites that match investors willing to lend to start ups with loans that are fairly high rate of interest, but provide an option where banks unwilling to lend

Question 4

Business angels

Answer 4

-Individuals who invest in very early stages of a business taking significant equity(share) stake.
-Willing to invest in risky start ups in hope of high returns

Question 5

Crowdfunding

Answer 5

-Many small investors gather together who are willing to invest through crowdfunding websites in return for some shares.

Question 6

Other businesses

Answer 6

-Larger firms tend to seek out small businesses and help them with finance in return for taking a shareholding