sources of business fance Flashcards
internal sources
are sources of money from within the business from owner or from previous business income
external sources
are sources of money from outside the business from other people putting money into the business
owners funds
this is money that is put into the business from the private savings of the owner. Many businesses are started using the owner’s own saving, an inheritance or redundancy pay from a pervious employer
retained profits
when businesses make profit, the owner can decide to spend these on themselves or to use some or all of the profits to expand and improve the business.
sale of an asset
some businesses will have possessions that they no longer need. these can be sold off to raise money needed for other investments.
bank loan
where the business will borrow a lump sum of money that must be repaid over time with interest.
overdraft
a pre-arranged amount of money that the business is allowed to use and pay back when it likes
grants
an amount of money that is given by either the European, national or local government, to aid in the creation of a business. This money DOES NOT have to be re-paid
venture capital
sometimes called an investor, it is a business person who invests in start up businesses for a % share of the profit.
hire purchase
is when you will buy an asset. You do not own the asset until you make the last payment. Leasing is similar to hire purchase but you rent the asset and never own it
trade credit
this means not immediately paying suppliers for stock. You are given a certain amount of days to pay.
share capital
money paid by shareholders to become owners of a limited company.
crowdfunding
small amounts of capital from a large number of individual to finance a new business venture. You give rewards or returns for the investment.
