Sources of finance

What does internal mean?

• A source from within the business
• A source from outside the business

What does external 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 an 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 smaller installments
• They are quick and easy to arrange
• You don't have to pay it back

What is an advantage of 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 source of finance for buying a new IT system?

• Mortgage

• Overdraft

• A bank loan

What is a suitable form of finance for a new office building?

• Mortgage

• Bank loan

• Trade Credit