Finance Flashcards
What is finance?
The money needed to start up and run a business
Why is there a need for finance
A entrepreneur looking to start up a business might not have enough money to do so
What are the difficulties in raising finance
The general reasons for difficulties raising finance are:
You may not qualify
They may decline
What are internal sources of finance
Internal sources of finance come from yourself or others close to you these are family, friends and personal savings
Advantages and disadvantages of sale & leaseback
A- good for short term finance
D- They can keep it
Advantages and disadvantages of issue new shares
A- New investors, brings money in and new ideas
D- Less profits, they have a say in decisions
What are external sources of finance
External sources of finance is finance that comes from others e.g. Bank loans, trade credit, government grants etc.
Advantages and disadvantages of a short term loan
A- quick money
D- interest on money taken out
Advantages and disadvantages of trade credit
A- gives you extra time
D- could cause a negative reputation and you have to pay more over time
Why do start ups need support from the government and individuals?
Because they don’t have enough money to keep their business surviving as often the first few months will be spent in debt
How does banks, accountants and solicitors and the princes trust support start ups
Banks- fast money at a large quantity
A- Fast and can provide input on how to stay on top of debts
D- Interest needs to be payed on the money taken out
Accountants and solicitors- they keep track of money spent and money that can be spent and help with legal issues
A- Very helpful and useful to make sure you don’t go in too deep
D- Expensive
Princes trust- provide free of charge help with finance
A- It is free
D- Your request could be denied
