business finance external

Question 1

bank loan

Answer 1

borrowed money to be given back with interest
advantage cash flow easier pay in instalments
disadvantages pay interest have loan security

Question 2

Overdraft

Answer 2

Pre arranged amount that the business can use
Pros short term funding flexibility
Cons interest charged if overdrawn

Question 3

Grants

Answer 3

Money given by government no paid back
Pros no paid back
Cons based on application not available for all businesses

Question 4

Venture capital

Answer 4

An invester
Pros money invested expertise attracts finance sources
Cons cost percent of business financial projection required risk of interference

Question 5

Hire purchase

Answer 5

Rent assets
Pros cheaper manage cash flow equipment updated regularly
Cons expensive in the long run

Question 6

Trade credit

Answer 6

Not paying immediately
Pros no intrest helps cash flow
Cons some don’t provide this

Question 7

Share capital

Answer 7

Money paid by shareholders to become owners of limited company
Pros no interest
Cons shareholders recive part of profit could lose control of business

Question 8

Crowdfunding

Answer 8

Small amounts of capital from large of individuals to finance businesses venture
Pros fast finance test public reaction
Cons lot of work money gave back if target not reached might give away too much