Summary Business finance

Business finance
Sources of finance:

Short term Medium term Long term
(within a year) (1-5 years) (5 years onwards)
Internal sources Retained profits Retained profits Owners own capital
Selling assets
External sources Overdrafts Bank loans Bank loans
Venture capitalists Venture capitalists Debentures
Leasing Crowd funding Loans from family
Grants Leasing and friends
Trade credit Grants Peer to peer funding
Debt factoring Crowd funding
Leasing
Grants
Share capital


Source of finance Term Advantages Disadvantages

Owners own capital Long  Quick and  May not
(internal source) convenient have enough
 No interest savings
payments to  May need it
make for personal
use
 Risk of losing
your own
money
Retained profits Medium  Quick and  Risk of losing
(internal source) convenient your profits
 Easy access
to money
 No interest
Selling assets Short  Can create  Might not
(internal source) space get the full
 Can be quick market value
 Can raise of the asset
money from  Might need
equipment the asset in
the future
Loans from family Long  Money may  May want a
and friends not need to stake in the
(external source) be paid back business
 Low interest  Arguments
may occur
between