25 External finance Flashcards
Define external finance
external finance is money generated from outside the business such as from investors or banks.
Define bank loan
bank loan is an external method of finance borrowed from a bank, which is then paid back with interest over a period of time.
Define venture capital
venture capital is a method of external finance, used to fund small- to medium-sized businesses.
Define share capital
share capital is funding raised by a company in exchange for a share in the business.
Define peer to peer lending
peer to peer lending occurs when a person lends money to other individuals or businesses via online transactions.
Define grant
grant is a sum of money given by a government or other organisations.
Define overdraft
overdraft is a short term source of external finance where a business has an agreement with a bank where it can spend more money than is in their account.
Define crowd funding
crowd funding is a large number of individuals who invest in a business, without a bank.
Define business angels
business angels are individuals who invest a large sum of money into the business in exchange for a stake.
Define leasing
leasing is where a business (the lessee) would pay to use assets owned by a lessor.
Define debentures
debentures is a long term loan to a business, they are entitled to a fixed rate of return and must be repaid on a set date.
Define mortgage
mortgage are secured loans where a business has to provide assets to support the loan as collateral.
