Sources of finance

Which of the following is NOT a source of finance for a business?

• Equity captial

• Overdraft facilities

• Depreciation

• Debt capital

What is a key disadvantage of using equity capital as a source of finance in private limited and public listed companies?

• Requires regular interest payments

• Results in loss of ownership and control

• Has a fixed repayment period

• Increases the business’s debt level

How does a government grant differ from a loan?

• A grant is non-repayable, while a loan must be repaid

• A grant must be repaid with interest, while a loan does not

• A loan is only available to large businesses, while grants are for startups

• • Grants can only be used for research purposes

Which source of finance allows a business to withdraw more money than it has in its bank account up to an agreed limit?

• Equity capital

• Debt capital

• Government grants

• Overdraft facilites

Debt capital requires the business to give up ownership and control in exchange for funding.

• True
• False