internal sources of finance

Question 1

Owner Funds Advatages

Answer 1

no need to pay interest or repay finance

Retention of ownership by individual

Question 2

Owner funds disadvantages

Answer 2

amount available may be limited

stress on day to day finance of individual

Question 3

owner funds

Answer 3

money that put into the business from private saving of the owners

Question 4

Retained Profit advantages

Answer 4

instantly available

control is not lost

Question 5

retained profits disadvantages

Answer 5

limited funds available

short term returns on shareholders investment

Question 6

retained profit

Answer 6

when business makes profit

Question 7

sale of asset

Answer 7

some businesses will have possessions that they no longer need

Question 8

bank loan advantages

Answer 8

makes cash flow easier

repayments in instalments

Question 9

bank loan disadvantages

Answer 9

pay back interest

have to back up loan with security

Question 10

bank loan

Answer 10

where the business will borrow a lump of some money that must be repaid overtime

Question 11

overdraft advantages

Answer 11

enable short term funding

cover day to day expense

Question 12

overdraft disadvantages

Answer 12

interest charged if overdrawn

Question 13

overdraft

Answer 13

a pre-arranged amount of money that the business is allowed to use

Question 14

Grants advantages

Answer 14

doesn’t have to be paid back

Question 15

grants disadvantages

Answer 15

not available for all business

Question 16

grants

Answer 16

money that doesn’t need to be paid back

Question 17

venture capital

Answer 17

called an investor. start up businesses

Question 18

hire purchase

Answer 18

asset until you make the last payment

Question 19

hire purchase advantages

Answer 19

buying outright

cash flow

Question 20

hire purchase disadvantages

Answer 20

long run due to fees

Question 21

trade credit advantages

Answer 21

helps cash flow

Question 22

trade credit disadvantages

Answer 22

provide the credit

Question 23

trade credit

Answer 23

certain amount of days to pay, paying suppliers for stock

Question 24

share capital

Answer 24

shareholders to become owners of a limited company

Question 25

share capital advantages

Answer 25

no interest paid

Question 26

share holders disadvantages

Answer 26

lose control of the business

Question 27

crowdfunding

Answer 27

capital from a large number of individuals to finance a new business venture

Question 28

crowdfunding advantages

Answer 28

finance with no upfront fees

Question 29

crowdfunding disadvantages

Answer 29

build up interest

business to investors