Accessing Resources & Raising Finance Flashcards
What is debt finance?
Funding which is borrowed from an outside party
What is equity finance?
Funding provided by owners of a business venture
What are some characteristics of debt finance?
No ownership
Reimbursed on fixed date
Payment of interest
What are some characteristics of equity finance?
Residual ownership
Not reimbursed
Payment of dividends
What does debt finance imply?
Going into debt implies having an obligation it outstanding liability to an outside party
What is a bank overdraft?
Allows business to draw more money from their account than they actually have.
What is a term loan?
A source of long-term debt with regular payments over a specified period
What are the 5 C’s of credit?
Character Capacity Contribution Collateral Conditions
What is trade credit?
Company’s open account arrangement with suppliers
What is a business angel?
Wealthy individuals who invest in entrepreneurial firms and also contribute their business skills
What is venture capital?
Independently managed, dedicated pools of capital that focus on equity investments in high/growth companies
What are the two primary sources of finance?
Debt finance
Equity finance
