Theme 2 keywords Flashcards
source of finance
Places from which a business may gain finance
Owners capital
Personal savings or share capital raised - entrepreneur may decide to invest in the share capital of the company
Retained profit
Any profit left in the business after the cost of sales, fixed overheads, tax and financing costs have been paid. Cash generated when trading has begun
Collateral
Something of value that is used a security when a loan is offered
Peer to peer lending
Websites that match up businesses wanting to borrow with investors who are looking for projects
Business Angels
Individuals who invest in the early stages of a riskier business and take an equity share in return for providing finance, advice and guidance
Crowdfunding
When many small investors fund a project, usually through a website (crowdfrunder.com)
Share Capital
Finance raised from selling shares
Venture Capital
Provision of finance from professional investors in return for equity usually or could be loans, riskier projects are often funded this way
Overdraft
A facility provided by a bank where depositors can go into a negative balance in the bank account
Leasing
When an asset is rented rather then purchased - sign a rental contract to pay a rental fee to the owner
Trade Credit
When a business is able to buy now and pay later for its supplies
Grants
Money given by the government or local council to businesses who are making a positive difference in community
Break even
The output when total costs = total revenue
Limited liability
When a business is a separate legal entity to its owners, which means that if the business goes bankrupt the owners only lose what they originally invested
