External sources of finance

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  • Created by: megangore
  • Created on: 30-03-16 16:44
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  • External sources of finance
    • Overdraft
      • the bank allows the business to draw more money from their bank account than they actually have
    • trade credit
      • items are bought from supplies on a "buy now pay later" basis. usually 30 or 60 days
    • leasing
      • used to obtain new equipment. the business rents the item from its owner
    • bank loan
      • an amount of money is borrowed from the bank, then repaid with interest over a set period of time
    • shares
      • a share in the business is sold to an individual. this money is then used to purchase new assets
    • mortgage
      • long term loan provided by a bank in order to buy a property
    • grant
      • money given to the business by the government used to help finance new projects
    • hire purchase
      • an item is bought on finance, repayments are made each month until the final payment when the item becomes the property of the firm
    • venture capitalists
      • these invest in small, risky business e.g. dragons den


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