Business Financing

What occurs when part ownership of the business is sold to an investor in exchange for funding?

• Debt financing

• Equity financing

• Personal savings

What is the owner's contribution to the business called?

• Revenue

• Profit

• Capital

• Expense

What is the capital needed to pay for the everyday costs of running the business?

• Working capital

• Growth capital

• Start-up capital

Which type of capital is used to purchase new equipment or machinery?

• Working capital

• Growth capital

• Start-up capital

Which financial product allows a business to take out a mortgage to purchase expensive fixed assets such as land and buildings?

• Business line of credit

• Business overdraft

• Bank guarantees

• Mortgages

Which financial product allows a business to have full use of the asset and gets to keep the asset at the end of the contract?

• Hire purchase

• Leasing

• Line of credit

• Venture capital

Which financial product allows businesses to save interest costs that would normally be paid on a loan to fund any asset purchase?

• Hire purchase

• Leasing

• Line of credit

• Venture capital

What is the main disadvantage of using personal savings to fund a new business?

• High interest rates

• Risk of losing the invested funds

• Requirement for regular interest payments

• Involvement of a third party

What is the main disadvantage of borrowing money from family and friends?

• High interest rates

• Involvement of a third party

• Strain on personal relationships

• Requirement for regular interest payments

What is the '3Cs test' used for?

• To determine the interest rate on a loan

• To decide the risk involved in giving a client a loan

• To evaluate the profitability of a business

• To assess the availability of grants