The Need For Capital and Sources of Finance

Capital

The money and other resources invested in the business

Start-up Capital

The capital that is needed to establish a business

Venture Capital

Funds invested or that are made available for investments.

Venture Capitalist

Usually, a wealthy individual or group of individuals who tries to spot an investment

Working Capital

Money that is needed to finance the day to day operations and expenses.

Equity Capital

Money that is raised from selling shares

Debt Capital

Any money that is borrowed by the business which must be repaid with interest

Internal Sources of Finance

Sale of fixed assets, retained profit, working capital

External Sources of Finance

Issues of shares, bank loans and overdraft, debenture, venture capital, government assitant

Debenture

A loan made to a company under terms set out in a certifying document

Sources of Short term Financing

Overdrafts, credit cards, trade credit, factoring debt

Medium Term Finances

Loans, hire purchase, leasing

Long Term Financing

Sales of shares, venture capital, debentures, mortgages and bonds, assistance from the government