Types Of Finance

Revision notes on finance types for GCSE Business Studies.

HideShow resource information
  • Created by: Anonymous
  • Created on: 11-01-08 00:20
Preview of Types Of Finance

First 387 words of the document:

Types of finance
There are three main types of finance that I could consider using to fund
my business:
Owner's Funds.
Owner's funds consist of money put into the business by myself the owner;
this will be personal savings and redundancy money, if I wish to get my
capital back I would have to sell the business, Owners capital can be
increased by introducing a partner. This is a good idea because the funds
do not need to be repaid and they are not subject to any external
conditions such as how the business is run etc. However these funds are
limited by how much money the proprietor has saved or received as a
redundancy sum.
Borrowed Funds:
Often referred to as debt finance as it involves the owner, myself,
obtaining some form of credit or loan, and therefore going into debt to
someone. This type of finance involves an interest charge which will have to
be repaid. Money can be repaid over a period of just a few days or several
years. This is useful if cash is needed urgently and/or cannot be provided in
any other way until a profit has been made. However if loans are not repaid
the debtor can lose their personal effects and even their homes when the
term of the loan finishes. If a loan is taken out, it must be certain that it can
be repaid if the business is not separate from the owner.
These are available to all sorts of businesses and the amounts vary from
£50p/w for new small businesses up to many £millions for multinational
companies. Providers of grants vary from the EU to local councils and from
the UK government to charitable trusts. A grant is the ideal form of funding
for a new business; the money does not have to be repaid and is not
provided by the owner. However because grants are in effect providing
`free-money' in exchange for the service that the business will provide to
the community, they are hard to come by and therefore not a particularly
viable source of finance.


No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all resources »