Sources of finance

A mind-map of the sources of finance

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  • Created by: BethanyM
  • Created on: 22-05-13 20:43
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  • Sources of finance - (external finances are purple and internal are blue)
    • Lease- borrowing items, give them back
      • Don't pay repairs, no maintenance, up-to-date
      • Not yours, monthy fees, ongoing cost
    • Hire purchase- Hiring then own when last payment is made.
      • Spread payments, get to use it straight away.
      • Willl cost more over time than it would to purchase outright, charged interest, can't sell it until all the payments are made.
    • Trade Credit- Sells goods and allows 30 days or agreed amount of time to repay.
      • Can make money first, use products, convenient , 30 days interest free
      • Fines, interest, stop buying if not repaid, easy to overspend.
    • Overdraft- Can withdraw on money you don't have
      • Flexible, convenient, only pay interest while in it
      • Can be easy to overspend, expensive, can be high interest
    • Grants- From government, boosts economy, jobs created, providing services
      • Don't have to repay, no interest
      • Really hard to get, especially as we are in a recession
    • Mortgage- Long term money to buy property,  around 25-35 years .
      • Fixed fate, lower rate interest, paid monthly
      • Property can be repossed if you don't keep up with repayments.
    • Bank Loan- Amount of money borrowed from a bank. Bank will want proof to give you the loan. Loan for fixed period,1-5 years.
      • Money to start up, fixed payments over several years
      • Can take assets, have to prove you can repay the amount,  interest rates
    • New partner- new investor/owner
      • Money, new ideas, no interest
      • Lose some control over the business
    • Owner's investment- Owners own money
      • No interest, instant
      • Limited funds, no garuntee for return of money
    • Sales of assets- selling assets
      • Can make space, money on unused items
      • Decreases in value as they age, cost of selling
    • Share issue- selling shares on the stock market
      • You can make large amount of capital
      • More owners
  • Spread payments, get to use it straight away.
  • Money to start up, fixed payments over several years

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