3.5.3 - Making Financial Decisions - Sources of Finance Flashcards
1
Q
When might a business need finance?
A
When a business starts up or when it needs to invest.
2
Q
What does finance depend on?
A
The size of the business, type of business ownership
3
Q
What is equity?
A
Finance from shareholders
4
Q
What is debt
A
When a business runs out of money
5
Q
What is an advantage of borrowing from family and friends?
A
Can be quick to arrange and can be cheaper.
6
Q
What is a disadvantage of borrowing from family and friends?
A
Friction can arise, and the lender might want a say in the business.
7
Q
What are internal sources of finance?
A
Founder finance and retained profits.
8
Q
What is the external source of finance?
A
Bank Loans
