Sources of Finance

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 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

This type of finance does not need to be repaid.

• Bank Loan
• Overdraft
• Mortgage
• Government Grant

The source of finance that is provided by the Owners is called 

• Capital
• Overdraft

What is an advantage of an overdraft?

• There is never interest

• You can pay in smaller installments

• Useful for relatively small sums and short term finance

• You don't have to pay it back

Which of the following are DISADVANTAGES of selling shares as a source of finance? (select as many as appropriate)

• It means limited liability for the owners

• Dividends need to be paid to shareholders

• Large sums of money can be raised

• Does not apply to Partnerships or Sole Traders

Short Term sources of finance usually require money to be repaid within.....

• 1 week

• 1 month

• 6 months

• 1 year