external sources Flashcards
external sources
are sources of money from outside the business from other people putting money into the business
bank loan
where the business will borrow money that must be repaid with interest
bank loan advantages
repayments in installments, makes cash flow easier, don’t have shares issue.
bank loan disadvantages
pay back interest, loans have to be backed up with security.
overdraft
pre arranged amount the business is allowed to use
overdraft advantages
short term funding
bank loan disadvantages
interest charged if overdrawn , can be ended at any time
bank loan disadvantages
interest charged if overdrawn , can be ended at any time
grants
money that is given to a business that doesn’t have to be repaid.
advantages of grants
doesn’t have to be paid back, creates jobs
disadvantages of grants
not available for all businesses
venture capital
called an investor
someone who invests in a start up for a % of the profits
venture capital advantages
large sums of money from investors
disadvantages of venture capital
lose a % of the business, a long and complex process
hire purchase
you do not own the asset until the last payment is made
hire purchase advantages
cheaper than buying outright
disadvantages of hire purchase
more expensive
trade credit
not immediately paying suppliers for stock
advantages
no interest
trade credit disadvantages
suppliers may not be willing to provide credit
share capital
money paid by shareholders to become part owners of the company
share capital
money paid by shareholders to become part owners of the company
share capital disadvantages
shareholders receive part of the profits
crowd funding
small amounts of capital from a large number of individuals
