Sources of Finance

Private loans received from private individuals/firms. Interest only is paid over the debenture period and the original value paid at the end.

• Mortgage

• Debenture

• Venture Capitalist

• Bank Loan

Funds borrowed but must be repaid in full at the end of the agreement period with added interest. Normally paid back in instalments.

• Debenture

• Share Capital

• Bank Loan

• Mortgage

Involves raising funds for a new venture by asking a large number of people for small donations of money – normally through ‘Just Giving’ or ‘Go Fund Me’.

• Crowd Funding

• Mortgage

• Sale of Assets

• Share Capital

Involves a firm issuing it’s debts to an external organisation (factor). The factor chases the debt and collects the full amount – profit is then split between the two.

• Venture Capital

• Debenture

• Share Capital

• Debt Factoring

Organisations can sell their assets (machinery/vehicles) to obtain finance.

• Share Capital

• Retained Profits

• Sale of Assets

• Mortgage

Long-term method of borrowing, usually secured against property. Repayments are made over 25-50 years.

• Mortgage

• Bank Loan

• Venture Capital

• Debenture

A company can sell more shares to shareholders/increase the prices of its shares in order to raise finance.

• Share Capital

• Sale of Assets

• Retained Profits

• Sale and leaseback

Involves receiving loans from ‘business angels’/’loan sharks’ as they provide loans to businesses who are seen as ‘risky’ to banks. In return of lending money, they usually acquire a share in the business.

• Internal profits

• Share Capital

• Venture Capital

• Debenture

Organisations can use ‘retained profits’ which are profits kept in savings from a previous year. - Is this an example internal source of finance?

• True

• False