Understanding Business Finance Sources

What is an example of an internal source of finance?

• Bank overdraft

• Retained profits

• Crowdfunding

• Share capital

Which of the following is a long-term external source of finance?

• Trade credit

• Hire purchase (HP)

• Mortgages

• Bank overdraft

What is a disadvantage of using personal savings as a source of finance?

• No interest payments

• Limited availability

• No need to repay

• Tax benefits

Which source of finance involves selling company shares to raise capital?

• Leasing

• Share capital

• Trade credit

• Retained profits

What is a benefit of using retained profits as a source of finance?

• Increases debt

• No interest payments

• Requires collateral

• Dilutes ownership

Which of the following is a medium-term external source of finance?

• Crowdfunding

• Government grants

• Hire purchase (HP)

• Sale of assets

What is a potential disadvantage of using a bank overdraft?

• High interest rates

• Long-term commitment

• Requires selling assets

• Dilutes ownership

Which source of finance is typically used for short-term needs?

• Mortgages

• Share capital

• Trade credit

• Investment from business angels

What is a characteristic of peer-to-peer lending (P2P)?

• Involves banks

• Requires collateral

• Directly connects borrowers and lenders

• Only available for large enterprises

Which of the following is an advantage of using government grants?

• Must be repaid with interest

• No repayment required

• Increases company debt

• Requires selling equity