Unit 1 - Raising Finance (sources of finance)

The main sources of finance include:

Ordinary Share Capital

Money given to a company by shareholders in return for a share certificate that gives them part ownership of the company.

It also entitles them to a share of the profits.

Loan Capital

Money recieved by an organisation in return for the organisations agreement to pay interest during the period of the loan and to repay the loan within an agreed time.

Bank Loan

A sum of money provided to a firm or an individual by a bank for a specific agreed purpose.

Bank Overdraft

When a bank allowes an individual or organisation to overspend its current account in the bank up to an agreed limit and for a stated time period.

Venture Capital

Finance that is provided to small or medium sized firms that seek growth but which may be considered risky by typical share buyers or other lenders.

Personal sources of finance

Money that is provided by the owner(s) of the business from their own savings or personal wealth.