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

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

• Bank loan

• Angel investment

• Overdraft

• Retained profit

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

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 external source of finance?

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

Which is an example of an internal source of finance?

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

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