Sources of finance

Question 1

Internal sources of finance for a new/start up business

Answer 1

• Fonder finance = Entrepreneur
• Retained profits
• Friends and family

Question 2

External sources of finance for a new/start up business

Answer 2

• Bank Loans
• Bank Overdraft
• Business Angels
• Loans and Grants

Question 3

Internal sources of finance for a well established business

Answer 3

• Retained profits = using profits to fund future projects
• Working capital = difference in assets and liabilities
• Assets disposal = spare land

Question 4

External sources of finance for a well established business

Answer 4

• Issue shares = shareholders buy share, thus increasing cash
• Bank loan/overdraft = receive money from the bank/ owe bank money when your balance is 0
• Debentures = long term loan issued by company, fixed interest
• Venture Capital = investors that seek share capital and representation on the board
  Suppliers = provide goods in advance of pay (trade creditors), loyalty between brand and suppliers = better payment terms