Unit 3 LA D Quiz

What is the advantages of obtaining finance from owners' capital?

• Interest can change (variable)

• Limited amount

• No loss of ownership

• No interest charged

What is the disadvantage of obtaining finance from loans?

• Secured against asset

• Interest charged

• No loss of ownership

• Pay in instalments

What is the advantage of crowd funding as an external source of finance?

• No guarantee enough will be raised

• Can raise large amounts of money

• Interest charged

• Some loss of control

What is the disadvantage of obtaining finance through mortgages?

• Large amount can be obtained

• No ownership loss

• Interest charged

• Speeds up cash inflows

What is the advantage of obtaining finance through venture capital?

• Overall amount often much more than the price of asset

• Finance offered by expert

• Speeds up cash inflows

• Avoids need to pay lump sum

What is the disadvantage of debt factoring as an external source of finance?

• No need to repay/no interest/cuts costs and money out

• Avoids need to pay lump sum

• Speeds up cash inflows

• Only receive a percentage of what is owed

What is the advantage of obtaining finance through hire purchase?

• Avoids need to pay lump sum

• Only available for cash purchases usually

• Pay in instalments

• No need to repay/no interest/cuts costs and money out

What is the disadvantage of obtaining finance through leasing?

• Never actually own asset, and total cost will be higher

• Not responsible for upkeep of asset & spreads cost

• Keeps money in the business for longer

• Only short term and linked to stock purchases

What is the advantage of obtaining finance through trade credit?

• Amounts may be limited and for short term only

• Likely only to be small/less likely to get

• No interest or need to repay

• Interest can be low and fixed up front

What is the disadvantage of obtaining finance through grants?

• Difficult to find/qualify for/lengthy to apply for

• Only available for cash purchases usually

• No interest or need to repay

• Interest can be low and fixed up front