SO2

Question 1

Equity financing

Answer 1

equity financing is money that is raised from the issuing of shares.
however the major risk is that owners can lose all money invested if the business fails.

Question 2

Debt Financing

Answer 2

Debt financing is money that is borrowed by the business must be repaid with interest. Funds must be repaid whether or not the business fails.

Question 3

Sources of equity financing

Answer 3

personal savings, capital, shares, venture capitalist, crowdfunding

Question 4

Sources of debt financing

Answer 4

Loans, debentures, bonds, trade credit, government assistance, sale of fixed assets

Question 5

Short term sources

Answer 5

Short term financing is typically needed for 1 year or less
e.g. Bank overdraft, trade credit, short term loans, factoring, credit cards

Question 6

Long term sources

Answer 6

Long term financing id generally needed for a period exceeding one year
e.g. bank loans, bonds, debentures, equity financing