S2 BDL - Financing a Business

What is interest in the context of financing a business?

• A share of the company's profits

• Money paid in addition to the amount of money borrowed

• A fixed monthly payment for using banking services

• The principal amount of money borrowed from a bank

What is a loan?

• A gift of money that does not need to be repaid

• A tax imposed on the company's revenue

• Money borrowed which must be repaid with interest

• A financial reward for the company's employees

What is a grant?

• A legal document outlining the terms of employment

• Money borrowed from investors in exchange for equity

• Money which often does not have to be repaid

• A penalty fee for late payment of debts

What is debt?

• The total assets of a company

• An amount of money that is owed (needing to be repaid)

• The financial statement of a company

• A donation made to the business by a charitable organization

What does every business need to get up and running?

• A) A business plan

• B) Finance

• C) A marketing strategy

• D) A customer base

Where can a business owner possibly get money to start their Café?

• A) Personal savings only

• B) Bank loans only

• C) Government grants only

• D) Personal savings, bank loans, and government grants

What is a benefit of using owner's savings to finance a business?

• You have to pay interest on the borrowing

• It is paid back in installments

• You do not have to pay interest on the borrowing

• It has to be paid back to the government

What is a characteristic of a bank loan when financing a business?

• It does not have to be repaid

• It is money given from the government

• It is paid back over time with added interest

• It is used to improve unemployment in an area

What is a government grant?

• A sum of money that has to be repaid with interest

• Money given from the government to the business that does not have to be paid back

• An investment from your savings account

• A loan that is paid back in installments

Under what condition might a business receive a government grant?

• When it agrees to pay back the sum with interest

• When it uses owner's savings for financing

• When it meets certain conditions, such as improving unemployment in an area

• When it takes a bank loan