external finance

Question 1

what is external finance

Answer 1

finance sourced from outside the business

Question 2

what is an overdraft

Answer 2

business can go 20% overdrawn on current account

Question 3

what is a grant

Answer 3

government grants money for upcoming projects to benefit community

Question 4

what is a bank loan

Answer 4

bank loans business money which is repaid with interest

Question 5

what is an interest rate

Answer 5

the cost of borrowing or the reward for saving

Question 6

what is venture capital

Answer 6

experienced business person invests money in return for share

Question 7

what is share capital

Answer 7

finance raised through shares

Question 8

what is trade credit

Answer 8

business given 30,60 or 90 days to pay for a good

Question 9

what is a business angel

Answer 9

similar to venture capitalist

Question 10

leasing

Answer 10

business rents equipment

Question 11

what are advantages of using external finance

Answer 11

can access large amounts of money
gain experience from investors
finance business long term
help business plan effectively

Question 12

what are disadvantages of using external finance

Answer 12

subject to credit checks
can be turned down
involvement of 3rd party
have to pay interest
business loses % of profit to shareholders