SUSD 410: Sustainable Finance for Development - Local Sources of Finance

A set of vocabulary flashcards defining local financial mechanisms, equity, debt, leasing, and alternative funding options based on the lecture notes.

Local sources of finance

Funding options available within a specific country or region to support business operations, expansions, or projects, typically without foreign exchange risks.

Equity Financing

The process of raising capital through the sale of shares in a company, involving investors purchasing ownership stakes.

Personal Savings

Funds saved by the business owner that are invested into the business, often serving as the first source of capital for new entrepreneurs.

Angel Investors

Wealthy individuals who provide capital to startups in exchange for ownership equity or convertible debt.

Venture Capitalists

Firms or individuals that invest in high-growth potential businesses in exchange for equity.

Initial Public Offering (IPO)

The process of offering shares of a private corporation to the public in a new stock issuance to raise capital from public investors.

Short-term Loans

Bank loans typically used for working capital that are paid back within a year.

Long-term Loans

Bank loans used for purchasing assets or business expansion, with repayment periods extending over several years.

Government Loans and Grants

Financial assistance provided by the government to support businesses, often with favorable terms such as low-interest rates or no interest.

Microfinance

Small loans provided to entrepreneurs and small businesses that do not have access to traditional banking services.

Corporate Bonds

Debt securities issued by companies to raise capital, repayable with interest at a future date.

Retained Earnings

Reinvesting a portion of the company's profits back into the business for expansion, development, or other purposes.

Trade Credit

An arrangement where suppliers allow businesses to purchase goods or services and pay for them at a later date, usually within 30 to 90 days.

Operating Leases

Renting equipment, machinery, or property for short periods without taking ownership.

Finance Leases

Long-term lease agreements where the lessee effectively gains ownership of the asset over the lease term.

Crowdfunding

Raising small amounts of money from a large number of people, typically via online platforms, using rewards-based or equity models.

Factoring

Selling accounts receivable (invoices) to a third party (a factor) at a discount in exchange for immediate cash.

Savings and Credit Cooperatives (SACCOs)

Member-owned financial cooperatives that provide savings and credit services to their members.