Business: Section 3 (Sources of Finance)

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  • Sources of Finance
    • Why do firms need finance?
      • Start up capital.
      • Finance poor initial cashflow
      • Day to day running , working capital.
      • Customers delayed payments
      • Expansion
    • Small firms - Five main sources
      • Grants - Given to qualifying new or small firms. E.G Princes trust.
      • Trade Credit - Rather than customer paying cash on delivery , Invoice given allowing time to earn money.
      • Overdrafts - Let the firm take more money. High interest charges.
      • Loans -3 types
        • Bank - Quick easy , but repaid with interest. Bank may require collateral (Repossess assets)
        • Friends and family - Hard to persuade but good alternative.
        • Mortgages- More than 5 years , buying property. You can remorgage house (Acts as collateral)
      • Venture capital - Invested by indivduals or businesses who specialse in giving finance. E.G Dragons den

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