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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