Sources of Finance

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Sources of Finance

external sources

banks

assets such as a house

interest payable based on the predicted risk

overdraft facilities

builing societies

security

assets

interest is payable based on the risk

overdraft facilities based on the business plan

commercial mortgages

business accounts

offer loans

hire purchase

finance company can take them back if payments are not made

goods are not owned by the business

used by the business while they are being paid for to a finance company

leasing

does not owned the goods at the end of lease

make use of resources and pay to use them every month

venture capitalists

return for a share of the ownership

invest in new and up-and-coming risky ventures

factoring

collects the debts and takes a percentage cut for this service

sells it debts to anothe rcompany and receives some of the money immediately

share issues

known as floating on the stock exchange

not offered publicly but business contacts, friends or family can buy them

raise finance

friends or family

money from friend and family may either invested in the business in exchange

government grants and Prince's Trust loans and grants

Subtopic

amount of the money will depend on where it is coming

money given to an entrepreneur that does no have to be paid back

internal sources

capital from profits

owner's savings

business remains totally in the control of the owner

interest does not to be paid

use their own personal savings to start the business