External finance

Authorised share capital

The maximum amount that can be legally raised

Bank overdraft

An agreement between a business and a bank that means business can spend more money than it has in its account

Capital gain

The profit made from selling a share for more than it was bought

Crowd funding

Where a large number of individuals invest in a business or project on the internet, avoiding the use of a bank

Debenture

A long term loan to the business

Equities

Another name for ordinary share

External finance

Money raised outside the business

Issue shared capital

Amount of current share capital arising from the sale of shares

Lease

A contract to acquire the use of resources such as property or equipment

Methods of finance

• Loans

• Mortgages

• Debentures

• Share capital

• Venture capital

• Bank overdraft

Peer to peer lending

Where individuals lend to other individuals without prior knowledge of them

Permanent capital

Share capital that is never repaid by the business

Secured loans

A loan where the lender requires security to provide protection

Share capitsl

Money introduced to the business through the sale of shares

Unsecured loans

Where the lender has no protection if the borrower fails to repay the money owed

Venture capitalism

Providers of funds for small companies that may be considered too risky for investors