Sources of Finance (1)

Grants & Subsidies
Ad: Usually doesn't have to be repaid. Dis: Often given with 'strings attached' e.g. locate in a certain area. A sum of finance given to a business by an organization for a purpose.
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Bank Loan
Ad: Quick, easy to arrange. Dis: Repaid with interest; bank may insist on selling some of the firms' property if interest/loan is not repaid. A sum of money obtained from a bank which must be repaid, on interest.
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Leasing
Ad: Care and maintenance carried out by leasing company. Dis: Total cost will be higher than purchasing asset. Allows firm to use an asset but it doesn't have to purchase it. Monthly lease payments are made.
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Hire Purchase
Ad: Firm doesn't have to find large cash sum to purchase asset. Dis: Deposit paid at the start. Allows business to buy fixed asset over a long period of time with monthly payments with interest.
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Overdraft
Ad: 'flexible form of finance' - vary each month with needs of a business. Dis: Variable interest rates, repaid at short notice. Bank gives the business the right to take out more money than on the account.
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Trade Credit
Ad: Interest-free loan for the length of time that payment is delayed. Dis: Supplier may refuse to give discounts, refuse to supply goods if payment is not paid quickly. When a business delays paying its suppliers for 30 to 90 days.
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Debt Factoring
Ad: Risk becomes the factor's and not the business. Dis: Firm doesn't receive 100% of the value of it's debt. Debtor (customer who owns firm money for goods bought). Specialist agencies that 'buy' claims on debtors for immediate cash.
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Debentures
Ad: Raises long term finance. Dis: Must be repaid and interest must be paid. Long-term loan certificates issued by limited companies.
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Other cards in this set

Card 2

Front

Bank Loan

Back

Ad: Quick, easy to arrange. Dis: Repaid with interest; bank may insist on selling some of the firms' property if interest/loan is not repaid. A sum of money obtained from a bank which must be repaid, on interest.

Card 3

Front

Leasing

Back

Preview of the front of card 3

Card 4

Front

Hire Purchase

Back

Preview of the front of card 4

Card 5

Front

Overdraft

Back

Preview of the front of card 5
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