External Finance
- Created by: march_e
- Created on: 21-05-17 16:26
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- External Finance
- Sources of finance
- family and friends
- provides money either directly into the business, quicker and cheaper to arrange and interest and repayment terms may be more flexible than a bank loan
- peer to peer funding
- involves raising a loan from a group of individuals or institutions and is a very flexible source of borrowing
- unsecured, so the borrowers do not have to commit personal or business assets as security, best suited for experienced companies
- business angels
- wealthy, entrepreneurial individuals who provide capital in return for a proportion of the company equity
- crowd funding
- entrepreneur can attract a ‘crowd’ of further investors
- family and friends
- Methods of finance
- loans
- amount of money borrowed for a set period within an agreed repayment schedule
- share capital
- Money invested in a company by the shareholders.
- venture capital
- capital that is invested in a project where there is a substantial element of risk relating to the future creation of profits and cash flows
- overdrafts
- provided when businesses make payments from their business current account exceeding the available cash balance
- leasing
- hire purchase are financial facilities which allow a business to use an asset over a fixed period, in return for regular payments
- trade credit
- purchasing items on account and paying at a later date
- grants
- sum of money provided by the government to a business that does not have to be repaid
- loans
- Sources of finance
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