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WorksheetsSGS Business 1.3.6 Sources of Small Business Finance
Total questions: 35
Worksheet time: 18mins
Which is an example of an internal source of finance?
Owners' Funds
Venture Capital
Overdraft
Trade credit
Which is an example of an external source of finance?
Owners' Funds
Sale of assets
Retained profits
Bank loan
What is an advantage of an overdraft?
There is never interest
You can pay in smaller installments
Useful for relatively small sums and short term finance
You don't have to pay it back
What is an advantage of an overdraft?
There is never interest
You can pay in smaller installments
Useful for relatively small sums and short term finance
You don't have to pay it back
What type of finance involves less profit going to the owners?
Retained profit
Sale of assets
Overdraft
Bank loan
Which of these facts about venture capital is NOT true?
Venture capitalists tend to operate in fairly risky markets
Venture capitalists would be paid a share of the profits
Venture capitalists usually provide money only and have no interest in running the business
Venture capitalists usually invest large sums of money
Which of the following facts about crowd-sourcing is/are TRUE? (choose as many as apply!)
It is a method of internal fund raising
Can also be an excellent marketing tool for a business
It doesn't matter if the product launched is not successful
Great way of raising money quickly, esp. for a new business idea
Short Term sources of finance usually require money to be repaid within.....
1 week
1 month
6 months
1 year
Long Term sources of finance are for when the time needed to pay the money back is more than...
6 months
1 year
5 years
10 years
Which of the following are DISADVANTAGES of selling shares as a source of funds? (select as many as appropriate)
It means limited liability for the owners
Dividends need to be paid to shareholders
Large sums of money can be raised
Does not apply to Partnerships or Sole Traders
Which of the following would be the most appropriate source of funds for a new business (which is just launching) that makes mobile phone accessories?
Retained Profit
Sale of Assets
Share Capital
Trade Credit
This is the cash that is generated by the business when it operates successfully
Retained profits
Share capital
Angel investor
Owner savings
Which of the statements about retained profits is false?
You have unlimited amounts of money available
Shareholders and employees could be frustrated because there is less profit to be 'shared out'
You do not have to pay interest
You are free to use it for any purpose
Which of the following is NOT usually considered a personal source of finance.
Savings
Redundancy payments
Crowdfunding
Credit card
Which of the following statements about personal sources of finance is false?
Often cheaper in the long-term
Less 'red tape' or delay in getting the cash
Less personal financial risk for the entrepreneur
May be harder to raise large amounts
An amount of money that is paid back within an agreed amount of time, with interest
Bank loan
Angel investment
Overdraft
Retained profit
Which of the following statements about bank loans is not true?
Usually used for large amounts of money that need to be paid back over a longer time-frame
Interest rates make the loan more expensive
Easy to get
Usually cheaper than consistently using a bank overdraft
A short-term source of finance from a bank that usually is only used in an emergency/when needed
Overdraft
Loan
Share capital
Credit card
Which of the following statements about overdrafts is not true?
Short term source of finance
It's really a small, short term loan
It's flexible, in that it can be used whenever it is needed
Cheap - the interest rate is usually lower than that of a long-term bank loan
Case study: Apple plans to develop a prototype for an iPhones with a flexible display. Which of the following sources of finance would be most appropriate?
Retained profits
Selling shares
Crowdfunding
Bank loan
Case study: after years of success and growth, Shark Tank success story Lumibowl (a clip-on light that illuminates your toilet bowl so you 'hit your target' in dark of night!) is ready to grow extensively into other countries. It needs huge amounts of money in order to do so. Which source of finance would be a good fit?
Raising share capital by transforming from a partnership to a public corporation
Taking advantage of the agreed overdraft with the bank
Retained profits of $80,000
Crowdfunding
True or false - crowdfunding is usually only used for new business start-ups/concepts and is therefore inappropriate for existing large, profitable businesses
True
False
