Sources Of Finance

Question 1

examples of long term finance

Answer 1

- share capital 
retained profit 
venture capital 
mortgages 
bank loans

Question 2

examples of medium-term finance

Answer 2

bank loans
leasing
hire purchase
government grants

Question 3

examples of short term finance

Answer 3

overdraft 
trade creditors (bills you have to pay supplier maybe at a later date)
factoring ( people who give the businesses doing buy now pay later the money and if the customer doesn't pay in those months they charge interest)

Question 4

what does the government use to keep getting money?

Answer 4

• multiplier effect

example interests as they get more money £200 now maybe £2900 in 2 years

Question 5

what factors affect the type and amount of finance required?

Answer 5

1. what is the finance required for?
2. the cost of the finance (interest)
3. flexibility of the business
4. businesses organisational structure

Question 6

main sources for a new start-up business

Answer 6

INTERNAL: founder finance
retained profit, friends and family
EXTERNAL: bank loan, overdraft, business angels, loans and grants