Sources of finance Flashcards
Personal savings
+ Paid back with interest
+ Don’t need approval for use
-Can lose your money
Investment from family and friends
+ Keen to support you
+ Charge lower interest
-Can lose their money and create tension
Bank overdrafts
Short term lending from the bank when there is no money left in the accounts.
+ Covers short term financial issue
-Only short term
-High interest
Bank/building society loan
+ Large sums
-Detailed financial information for approval
-Seize assets upon failing to pay back
Leasing
Rent equipment.
+ Short term, cheaper than buying equipment
+ Updated equipment.
-Expensive long term
Mortgages
+ Borrow large sums
+ Low interest rate
-Detailed financial information for approval
-Seize property upon failure to pay back
Community sources
+ Improve lives of people in the community
+ No paying back
-Only for community projects
-If not used as agreed will be taken back
Grants
Offered by government.
+ No paying back
+ For expensive projects
-Can only be spent on a specific project
-If not used as agreed will be taken back
Subsidies
+ Brings money into enterprise or reduces tax bill
-Only for specific enterprises
-Enterprise has to meet certain conditions to get it
Crowdfunding
Social media.
+ Raise large sums
-Requires abilities with social media
Selling shares
+ Raise large sum
-Lose control
Continue growth and expansion
- Personal savings
- Retained profits
- Private institutions: micro-finance lender (higher interest than banks)
- Venture capital: individual or groups (expect to have a say and provide asitance)
- Issue shares
