Sources of Business Finance Flashcards
All 10 cards in this deck
What is an overdraft?
A short-term source of finance letting a business spend more than is in its bank account, up to an agreed limit.
What is trade credit?
Credit offered by suppliers, allowing a business to receive goods now and pay for them later (e.g. in 30 days).
True or false? Trade credit is a long-term source of finance.
False. Trade credit is short-term, usually repaid within 30–90 days.
What are personal savings as a source of finance?
Money the owner puts into the business from their own funds — a long-term source with no interest to pay.
What is venture capital?
Finance from an investor who puts money into a business, usually in return for a share of the ownership and a say in how it is run.
What is share capital?
Money raised by selling shares in the business to investors, who then own part of it.
What is a bank loan as a source of finance?
A sum borrowed from a bank and repaid in instalments over an agreed period, with interest.
What is retained profit?
Profit kept in the business after costs and taxes, rather than taken by the owners, and reinvested.
What is crowd funding?
Raising small amounts of money from a large number of people, usually through an online platform.
Name three factors a business should consider when choosing a source of finance.
The amount needed, the cost (e.g. interest), how long the money is needed for, and whether the owner wants to keep full control.