Bank overdrafts - money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn".
- The firm only needs to borrow when and as much as it needs
- Expensive - high interest rates
- Bank can insist on being repaid within 24 hours
Trade credit - Extra time given 30-60 days to improve financial sittuation
- Obtain goods or services from another business but do not pay for it immediatley
- Boosts day-to-day working capital
- Other businesses may be reluctatnt to trade with the business if they do not get paid in good time
Venture capital: High risk capital invested in a combination of lans and shares, usually in a small, dynamic business
- Getting outside investment for businesses that are unable to raise finance through the stock riskier companies
- Compensate for risks by demanding a substantial part of the ownership of the company
- Might want to contribute to the running of the business
- Dilutes owner's control
- Brings in new experience and knowledge
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