3.1 Sources of finance

________: asset is sold to a company which agrees to make fixed repayments over an agreed time period; the asset belongs to the company.

________: financial benefits given by the government to a business to reduce costs and encourage increased production.

________ (also known as loan stock or corporate bonds): bonds issued by companies to raise debt finance, often with a fixed rate of interest.

________: raised from the businesss own assets or from profits left in the business (ploughed- back or retained profits)

________= (bank agrees to a business borrowing up to an agreed limit as and when required)

________: risk capital invested in business start ups or expanding small businesses, which have good profit potential, but do not find it easy to gain finance from other sources.

________: raised from sources outside the business.

capital needed by an entrepreneur to set a up a business

capital needed to pay for raw materials, day-to-day running costs and credit offered to customers

Current liabilities

raised from the businesss own assets or from profits left in the business (ploughed-back or retained profits)

raised from sources outside the business

profit left after all deductions, including dividends, have been made; this is "ploughed back" into the company as a source of finance

selling of claims over debtors to a debt factor in exchange for immediate liquidity; only a proportion of the value of the debts will be received as cash

asset is sold to a company which agrees to make fixed repayments over an agreed time period; the asset belongs to the company

obtaining the use of equipment or vehicles and paying a rental or leasing charge over a fixed period

loans that do not have to be repaid for at least one year

bonds issued by companies to raise debt finance, often with a fixed rate of interest

risk capital invested in business start ups or expanding small businesses, which have good profit potential, but do not find it easy to gain finance from other sources

individual investors who put in their own money in a variety of businesses and are seeking a better return than they would obtain from conventional investments

financial benefits given by the government to a business to reduce costs and encourage increased production

Capital needed by an entrepreneur to set a up a business

Capital needed to pay for raw materials, day-to-day running costs and credit offered to customers

Raised from the business's own assets or from profits left in the business (ploughed-back or retained profits)

Raised from sources outside the business

Profit left after all deductions, including dividends, have been made; this is "ploughed back" into the company as a source of finance

Bank agrees to a business borrowing up to an agreed limit as and when required)

Selling of claims over debtors to a debt factor in exchange for immediate liquidity; only a proportion of the value of the debts will be received as cash

Asset is sold to a company which agrees to make fixed repayments over an agreed time period; the asset belongs to the company

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

Loans that do not have to be repaid for at least one year

Bonds issued by companies to raise debt finance, often with a fixed rate of interest

Risk capital invested in business start ups or expanding small businesses, which have good profit potential, but do not find it easy to gain finance from other sources

Individual investors who put in their own money in a variety of businesses and are seeking a better return than they would obtain from conventional investments

Financial benefits given by the government to a business to reduce costs and encourage increased production