Finance

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whats is a bank loan
Is a fixed term with a fixed payment along with interest (it is long term)
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adavantages of a bank loan
Lower amounts can be borrowed low interest rates
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Disadvantages of a bank loan
Less flexible than an overdraft have to pay back in a shorter time than a mortgage interest needs to be paid
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Definiton: Loan from friends and family
An informal agreement where a sum is given between friend and family
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Advantages of a loan from friends and family
Easy to arrange ussually free of interest, family is flexible and understanding. doesnt effect credit rating
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Disadvantages of a loan from friends and family
May not lend as much as you want. Cant repat them back, relationship broke, people think that they own part of ur business
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definititon: Overdraft
(SHORT TERM) it gives entrepenurs and business the right tob borrow variable amounts of money to an agreed limit
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Advantages of an overdraft
Short term, get moeny straight away, beneift in interst cost dont need to ask bank.
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Disadvantages of an overdraft
Higher intrest rate. risk of reduction limit, risk of seizing very high intrest
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Definition: mortgage
A legal agreement which a a bank,building society, e.t.c lends money at interest in exchange for taking title of the debtors property, wit the condition that the conveyance is void of payment of the debt
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Advantage of a mortgage
You have ownership of you have ownership of your business and its premeisies. Comercal mortgages have lower intrest rates.
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Disadvantage of a mortgage
not everyone can get 1.pay back more than your borrowed. got to haver good credit rating.
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Definition of Trade Credit ( short term)
credit wxtended to you by suppliers who let you buy now and pay later ussually 30 days.
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Advantage of trade credit
More sales- induces more sales over tiem. No money- Business can make product to pay them backafter
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Disadvantage of trade credit
Loss of suppliers failure to pay credit is lose of suppliers
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Definition: grant
Sujkm of money given to an entrepeneur or a business by a governemnt
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Advantage of a grant
Money doesnt have to be payed back.seen as financial help free money!
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Disadvantage of a grant
Many businesses dont qualify. requires lots of reaserch and planning very competive
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Definititon of price
The amount a business asks a customer top pay for a single product. It is important for an entrepenur to decideguided by what competeors sell and if costs been covered
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Definition of revenue
Money Made from selling a product or service, the income recievd
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How do you calculate revenue
Selling price X sales
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Fixed costs Definition
nessary to set up and run a business. these include start up costs ( one of payments) Running costs ( Regular Payments e.g rent, raw materials, wage, costs dont change
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Variable costs definition
Change acording to output. more output goes upn less output goes down. Cost change in relation to output
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how do you calcuate total costs
Fixed costs + varibale costs
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Card 2

Front

adavantages of a bank loan

Back

Lower amounts can be borrowed low interest rates

Card 3

Front

Disadvantages of a bank loan

Back

Preview of the front of card 3

Card 4

Front

Definiton: Loan from friends and family

Back

Preview of the front of card 4

Card 5

Front

Advantages of a loan from friends and family

Back

Preview of the front of card 5
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