Sources Of Finance Flashcards
Trade credit
Buying stock and paying for it later with no interest.
Personal savings
Money the owners have kept and saved themselves. It’s hard to save large amounts and takes a long time to gain back.
Over draft
Spending more money then what you have in your bank. No time limit to pay back But there is often a charge and always paid in full.
Retained profit
Profit set aside and saved by the business.
Share capital > selling shares
Sells off ownership to parts of their company investors. The money doesn’t have to be repaid but you loose control over part of your business. They gain part of your profit.
Venture capital
Specialist investors with experience and skills. They invest their money and have business experience. Tend to want larger share of the business.
Bank loan
Offers large sums of money but in need of regular repayments and charges interest fees. End up paying more than burrowed.
Friends and family loan
More relaxed and won’t charge interest. Less of a chance of finding someone to lend the amount you need.
Mortgage
Loan specifically for the purchase of property. Normally over a long period of time. Interest costs less. Interest over all is high.
Selling assets
Take assets (items they own) and sell them. Tends to be things they don’t use but sometimes things a business needs. Quick way to make large sums of money.
Government grant
Government gives businesses money for a particular need. Difficult to get and don’t need to be repaid but if it does it’s cheaper then a loan.
Hire purchase
Business rents something instead of buying it. Don’t have to spend a lot upfront but spends more in the long run. Can owe more money when returning or damaging.
Crowdfunding
Many people pledging small amount of money each. Some people get things told they will get things in return but that isn’t always the case.
