5.2 Sources of Finance Flashcards

Front

Internal source of finance

Back

is one that exists within the business.

Front

External source of finance

Back

is an injection of funds

into the business from individuals, other businesses or financial institutions.

Front

Trade credit

Back

is a period of time offered by suppliers of

goods and services before payment is to be made.

Front

Bank loan

Back

is an amount of money provided to a business for a stated purpose in return for a payment in the form of interest charges.

Front

Venture capital

Back

is funds (in the form of a mix of share and

loan capital) that is advanced to businesses which are thought to be relatively high-risk.

Front

Debt factoring

Back

takes place when banks provide up to 80

per cent of the value of a business’ debts immediately to provide an instant inflow of cash.

Front

Microfinance

Back

is the provision of financial services for poor

and low-income clients.

Front

Crowdfunding

Back

is a source of finance that entails collecting

relatively small amounts of money from a large number of supporters (the ‘crowd’).

Front

Government grant

Back

is a sum of money given to

entrepreneurs or businesses for a specific purpose.