2.1 Finances

Internal Finance

Finance sourced from within the business

Retained Profit

Profit reinvested back into the business from previous years

External Finance

Finance obtained from sources outside the business

Family and Friends

Personal connections lending money, often to sole traders

Banks

Financial institutions providing loans to businesses

Peer-to-Peer Lending

Obtaining a loan from individuals or institutions

Business Angels

Investors providing funds in exchange for a share of the business

Crowdfunding

Individuals investing in businesses in return for a share

Loans

Borrowing money from a bank with an obligation to repay

Overdrafts

Allowing a business to spend more than its current account balance

Leasing

Renting assets needed by the business

Trade Credit

Short-term financing from suppliers allowing deferred payment

Grant

Money provided by the government that does not require repayment

Share Capital

Finance invested in a company through shares

Venture Capital

Funds provided to high-risk businesses in the form of shares and loans

Unlimited Liability

Owner is personally responsible for all business debts

Limited Liability

Owner's liability is limited to the value of their share capital

Business Plan

Document outlining the business's nature and growth strategy

Cashflow Forecast

Document predicting cash inflows and outflows