Key terms
This is spending required for both short term and long term
What are capital needs
Funds raised to be returned in less than a year
What is short term finance?
Bank agrees to a business borrowing up to an agreed limit as and when required
What is an overdraft?
The practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the internet.
What is Crowdfunding?
Funds given to businesses that do not have to be repaid
What are grants?
Capital needed. by an entrepreneur to set up a business
What is start-up Capital ?
Owner's savings used as a source finance
what is personal saving?
This is a type of loan that is obtained to support a temporary personal or business capital need.
What is short term loan?
An asset is sold to a company which agrees to make fixed repayments over an agreed time period; the asset belongs to the company
What is hire purchase?
These are financial benefits given by the government to a business to reduce costs and encourage increased production
What are subsidies?
finance raised from sources outside the business
What is external finance?
When a company sells off its Assets to raise money
What is sale of assets?
This delaying payments of bills for goods and services received
What is trade credit?
This is obtaining the use of equipment or vehicles and paying a rental or leasing charge over a fixed period. This avoids the need for the business to raise long-term capital to buy the asset; ownership remains with the leasing company
What is leasing?
Individual or institutional investors welcomed by a company to raise capital
Who are shareholders?
A low income, rural, business in need of capital can raise funds through this
What is microfinance?
The capital needed to pay for raw materials, day to day running costs and credit offered to customers.
What is working capital?
The is selling of claims over debtors to a debt factor in exchange for immediate liquidity; only a proportion of the value of debts will be received as cash
What is debt-factoring?
These are bonds issued by companies to raise debt finance, often with a fixed rate of interest
What are long term bonds?
The provision of very small loans by specialist finance businesses, usually not traditional commercial banks
Who are Microfinance providers?
The ability of a firm to pay its short term debts
What is liquidity?
The profit left after all deductions, including dividends have been made, this is sloughed back
what is Retained profit?
This is a type of permanent finance raised by companies through the sale of shares or giving up a stake in the company
What is Equity financing?
Main difference between a loan and a mortgage?
Mortgages are secured for property
The is a financing When a company borrows money to be paid back at a future date with interest
What is long term debt financing