When a company sells things that they own to raise finance e.g. old machinery
What is selling of assets?
100
This is large amounts of finance are needed and a company doesn't mind losing some control of decision making e.g. an IPO
What is selling of shares?
100
A form of buying on credit where a business is able to pay its creditors in installments. The assets are legally the property of the creditor until all payments have been made. The buyer eventually owns the asset.
What is Hire Purchase?
200
A source of finance that is it is not always available. For example, when a firm is just 'breaks even'.
What is retained profits?
200
A main type of finance for buying property. A disadvantage is property can be lost of repayments are not made.
What is a mortgage?
200
A long term rental of a an asset. A Disadvantage is the business doesn't ever own the asset so it can't be sold.
What is Leasing?
300
The main source of finance for sole traders and partnerships.
What is personal funds?
300
A long term loan where the certificate holder receives interest payments even if the business makes a loss and before shareholders are paid any dividend. e.g. commercial and government bonds
What are debentures?
300
Similar to Grants but more focused on existing businesses rather than start ups. Often the focus of these are to provide benefit to society e.g. farmers given finance so that food prices can be stabilized
What are subsidies?
400
A source of finance that may cause disturbances in personal relationships
What is finance from family and/or friends?
400
When government supports a new project. An advantage is it is 'free money' and doesn't need to be paid back.
What are government grants?
400
Buying goods and supplies on credit from suppliers. Allows you to use cash for other purposes.
What is trade credit?
500
These are unused funds that have been placed in an interest bearing account e.g. a savings account or other companies stock
What is selling your personal investments?
500
When a bank allows a business to take out more money then they have in their account. Useful when a short amount of finance is needed in short term.
What is an overdraft?
500
Often a high risk source of finance. Capital from organizations that specialize in investing in companies for profit and high ROI