Sources of Business Finance

This is the cash that is generated by the business when it operates successfully

• Retained profits

• Share capital

• Angel investor

• Owner savings

Which of the statements about retained profits is false?

• You have unlimited amounts of money available

• Shareholders and employees could be frustrated because there is less profit to be 'shared out'

• You do not have to pay interest

• You are free to use it for any purpose

Which of the following is NOT usually considered a personal source of finance.

• Savings

• Redundancy payments

• Crowdfunding

• Credit card

Which of the following statements about personal sources of finance is false?

• Often cheaper in the long-term

• Less 'red tape' or delay in getting the cash

• Less personal financial risk for the entrepreneur

• May be harder to raise large amounts

An amount of money that is paid back within an agreed amount of time, with interest

• Bank loan

• Angel investment

• Overdraft

• Retained profit

Which of the following statements about bank loans is not true?

• Usually used for large amounts of money that need to be paid back over a longer time-frame

• Interest rates make the loan more expensive

• Easy to get

• Usually cheaper than consistently using a bank overdraft

A short-term source of finance from a bank that usually is only used in an emergency/when needed

• Overdraft

• Loan

• Share capital

• Credit card

Which of the following statements about overdrafts is not true?

• Short term source of finance

• It's really a small, short term loan

• It's flexible, in that it can be used whenever it is needed

• Cheap - the interest rate is usually lower than that of a long-term bank loan

Wealthy individuals who invest in high-potential businesses are...

• Banks

• Angel Investors

• Shareholders

• Crowdfunders

What do Angel Investors and Crowdfunders have in common?

• They require something in return for their investment

• They charge interest on money invested in the buisness

• They become part-owners of the business

• They are incredibly wealthy