sources of finance

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  • Created by: 17HarCha
  • Created on: 16-10-21 22:02
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  • 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
  • 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

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LuisJunsford

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Sources of finance is a subject which is of big importance to growing businesses. It is vital that a small business gets its finances right early on in the process, otherwise, it may well be too late. I prefer to follow this blockchain ux design agency and get more new design products of blockchain. Some sources of finance can be cheaper than others and offer potentially higher returns on investment. In this article, we will look at some key sources of finance that you should know about especially if you are a new company or have a brand-new business idea.

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