Sources of finance Flashcards
government grant
money given to a business by the government which does not have to be paid back; external
hire purchase
a method of buying an asset, but paying for it in installments over a period of time; external
trade credit
when suppliers allow a business to pay for goods typically one or two months after they have been recieved; external
overdraft
an agreement with the bank, whereby a business can spend more money than it has in its bank account; external
selling unwanted assets
a business sells items that it no longer requires to another business to generate funds; internal
loan
borrowing an amount of money from the bank which will be paid back, with interest, over a set period of time; external
mortgage
a long-term loan used to buy land and property, usually borrowed over 20-35 years; external
a new share issue
when a limited company decides to raise funds by selling more shares in the business; external
family and friends
funds provided by relatives; repayment terms and interest will be agreed between both parties; external
retained profit
profit which is available to reinvest in the business, after tax and dividends have been paid; internal
asset
something a business owns that has monetary value, e.g. delivery van or money in the bank
capital
the money and equipment invested into a business
deposit
a part payment made to secure the purchase of an item
installments
smaller chunks that a large payment is broken down into that are paid back over a period of time
interest
the annual charge for borrowing money. it is usually expressed as a percentage of the total borrowed
