Sources of finance

What source of finance could be used to buy property?

• A mortgage

• A loan

• An overdraft

• Hire purchase

Which is an internal source of finance?

• Trade credit

• Retained profit

• An overdraft

• Hire Purchase

What are venture capitalists?

• Investors who are celebrities

• Venture capitalists invest in new small business start-ups

• Venture capitalists are lenders who help with marketing fees

• Lenders and banks who give out low interest loans

Which is an external source of finance?

• Sale of assets

• Retained profit

• Hire purchase

What is a disadvantage of using a loan as a source of fiance?

• No more then £1,000,000 can be used

• Interest needs to be paid

• It doesn't take into account inflation

• It takes a long time to set up

Which is an advantage of using retained profit as a source of finance?

• More finance can be utilised

• You can use as much as you want

• No interest has to be paid

• It has a low interest rate

What is a disadvantage of using retain profit as a source of finance?

• No interest has to be paid

• Limited funds available

• No set up fees

• It spreads to cost of an asset over its useful

Answer explanation

You can only use profits the business has, if there are no retained profits the company can't raise money this way