Sources of Finance

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  • Sources of Finance
    • Share captial
      • issuing shares gives ownership
      • limited liability restricts finance that can be lost
      • a dividend doesn't have to be paid if a business cant afford it
      • the more shareholders the more skills and expertise
      • more shareholders means less direct vision
      • in profitable years dividends will need to be paid
    • loan capital- bank loan is repaid with interest
      • repayments are fixed for a specific, date each month
        • interest rates are normally low because of the security provided
        • size of the loan can change depending on how much you need
      • a small business may only be allowed to borrow a small amount
        • its expensive to pay off a loan quicker than agreed
    • Bank overdraft
      • over spend in a bank account at an agrred amount for a specific period of time
      • flexible
      • useful for temporary cash flow problems
      • security isn't usually required
      • interest rate is high
      • Untitled
    • venture capitalist is a professional investor willing to ivest in high risk businesses for a high return
      • good for businesses that cant get finance anywhere else
      • want a sigfinicant share in the business and high interest payments
    • business angel are wealthly entreprenue willing to invest into a small high risk business expect a high reutnrn


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