External Finance
- Created by: Izzie
- Created on: 28-04-17 09:48
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- 2.1 External Finance
- Is capital raised from outside the business
- Source of finance is where the finance is coming from
- Method of finance is how the finance is provided
- Family & Friends
- Amount may be limited
- Repayment T&Cs may be flexible
- May put pressure on relationships
- Banks
- Peer to Peer Funding
- Practise of an individual lending to others with whom there's no relationship or contact
- Borrowers are given a credit rating
- Lenders motive is profit
- Business Angels
- Wealthy individuals make personal investment into start up businesses in return for a share of the business
- Can offer support and expertise
- Can be seen a high risk as the business isn't etablished
- Crowdfunding
- Involves raising finance from a large number of people each investing different amounts of money
- Tend to invest small amounts of money
- Other Businesses
- Business with healthy cash balances may invest in other businesses
- May be to support another business
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