Sources of Finance

What does internal source of finance mean?

• A source from within the business

• A source from outside the business

Which is an example of an internal source of finance?

• Owners' Funds
• Hire Purchase
• Leasing
• Trade credit

Which is an example of an external source of finance?

• Owners' Funds
• Sale of assets
• Retained profits
• Bank loan

What is the best advantage of owners' funds?

• There will be little or no interest

• You can pay in smaller installments

• They take a long time to arrange

• You don't have to pay it back

What is an advantage of a bank loan?

• There will be little or no interest

• You can pay in pre-planned instalments

• They are quick and easy to arrange

• You don't have to pay it back

What is the most likely of a friends & family loan?

• There will be little or no interest

• You can pay in smaller installments

• They take a long time to arrange

• You don't have to pay it back

What is a disadvantage of a friends and family loan?

• It means you have no savings
• It can lead to personal conflicts
• It can take a long time to arrange
• They can be recalled immediately

What is the most likely / straightforward source of finance for a small firm?

• A debenture

• Issuing shares

• A bank loan

What is the most likely source of finance for buying property?

• Mortgage

• Factoring

• A bank loan

What is the most likely source of finance for buying a new IT system?

• Mortgage

• Factoring

• A bank loan