sources of finance
- Created by: 17HarCha
- Created on: 16-10-21 22:02
View mindmap
- sources of finance
- loans
- interest rates
- instant access to all money
- can be risky for businesses with unlimited liability
- no share of business given meaning full control
- external
- long term
- lower rates than over draft
- credit rating may be improved
- increases net assets and net worth on balance sheets
- no flexibility
- if payment fails it worsens credit score
- custom made repayment terms
- overdrafts
- short term
- high interest rates
- quick and simple to organise
- insant access to cash
- all shares kept
- custom made repayment terms
- bank can cancel overdraft at anytime
- only happens if a big financial problem occur
- may ruin credit rating if not paid
- external
- retained profit
- no interest rates
- no shares given full control
- internal
- safe low risk
- may create conflict with share holders
- usually finite retained profits
- slow growth
- established businesses
- no expertise added
- crowdfunding
- long term
- external
- usually for start up and new businesses
- can be used for established too
- nothing needs paying back
- may not always get all money needed
- time consuming
- may get good feedback
- shared profit
- lose reputation if it fails
- limited expertise
- trade credit
- short term
- external
- common in new and start ups
- simple to arrange
- build reputation with supplier
- cheaper
- no control given up
- may spoil relation ship with supplier if not paid
- if not paid may be eligible for a large fine
- venture capital
- lose decision making power is 50% o more of business is given away
- share is given up
- venture capitalists have expertise
- reduce risk for owner
- expansion possible
- long term
- external
- v.c want to sell their shares to make a profit
- loans
- venture capital
- lose decision making power is 50% o more of business is given away
- share is given up
- venture capitalists have expertise
- reduce risk for owner
- expansion possible
- long term
- external
- v.c want to sell their shares to make a profit
Similar Business Studies resources:
Teacher recommended
Comments
Report