Studied by 5 people
Needs for funding
Short term, Long term, Start up, Expansion
Personal savings of an owner
internal sources of finance
pros: Easy to retrieve, Quick
cons: may take time for owners to gain savings
Retained profits
Internal source profits kept back by the business
pros: no interest, quick
cons: start up wouldn't have savings
Selling existing assets
internal sources
pros: no interest to be paid, helps make money quick cons: a business may not have unwanted assets
Hire Purchase
allowed a business to buy a fixed asset by make a down payment first then it is paid in installments
Share Capital
capital raised by selling shares to shareholders
Venture capital (business angels)
money invested by a third party to fund a business
pros and cons of venture capital
pros: provide expert advise on the business, can gain money quick cons: the angels would take a lot of profits this could be risky for the business
Crowdfunding
raising capital from small amounts from many investors, usually through social media and the Internet
founders dont get dividend, instead get discounts or perks
Pros and cons of crowdfunding
pros: no interest, efficient cons: may not get enough funds in time
Bank overdraft
agreement with banks where a bank withdraws more money than in its account
pros: can be arranged quickly cons: expensive, due to interest
Trade payables
business often buy resources and pay for them at a later date
unsecured back loans
when a bank lends money without the securing of having claim on the business's assets
mortgage
the lender must use land or property as security in change for money
debenture
an unsecured debt, usually with a maturity of 10 years or more
Note 
Flashcard (64)