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| Question | Answer |
| Internal Finance | Funds used within the business to fund expansion or growth eg. retained profits and sale of assets. |
| Owner's capital | When an entrepreneur invests their own money into a business eg. personal savings |
| Retained Profit | Profit kept within the business from profit after tax to help finance future activity |
| Sales of assets | A method of raising short term finance by disposing of business assets in return for cash. |
| External Finance | The ability to raise funds from sources outside of the business: - Bank loans and overdrafts - Venture Capital - Crowd funding - Share capital - Business Angels |
| Peer-to-peer funding | The practise of an individual lending to other individuals (peers) with whom there is no relationship or contact. |
| Business Angels | Wealthy individuals making personal investments into start-up businesses in return for a share of the business ie. percentage equity |
| Crowd Funding | This is when the business venture is funded by raising small amounts of money from lots of people eg. through the internet |
| Loans | When a lender provides capital (moeny) to a borrower and the borrower agrees to repay the borrowed money, with interest, over a period of time. |
| Share Capital | Money raised from the sale of shares which is used to fund the future activities of a business. |
| Venture Capital | Investment from an established business person or business into a new business in return for a percentage equity in the new business |
| Overdrafts | The pre-agreed facility to overspend on a current account, up to an agreed sum |
| Leasing | A contract that allows the renting of assets from another party e.g. lease premises, equipment, land etc |
| Grants | Fixed amounts of capital provided to a business by the government or other organisations to fund specific projects |
| Trade credit | An arrangement by a business to provide goods and services on account eg. 30 days |
| Liability | The extent to which an investor is legally responsible for the debts of a business Liability can be: - Limited - Unlimited |
| Shareholders | Investors who are part owners of a company and receive a dividend, which is a share of the profit, in return for their investment |
| Dividends | A percentage of profit paid to shareholders as a reward for their investment |
| Business Plan | A document that describes how an entrepreneur proposes to set up a new business (finance, marketing, HR and operations) in order to receive external finance |
| Cash-flow Forecast | The movement of cash in and out of business over a period of time. |
| Business Plan | A document that allows a business to plan for the future, allocate resources, identify key decisions and prepare for problems and opportunities. |
| Creditors | Those owed money by a business eg. suppliers |
| Bankrupt | When an individual is unable to meet personal liabilities, some or all of which can be a consequence of business activities. |
| Cash Flow Forecasting | The process of estimating the expected cash inflows and cash outflows over a period of time. |
| Cash Flow Forecast | A forward looking statement that tries to predict cash inflows and outflows in the future. |
| Cash Flow Statement | A backward looking statement that shows what happened to cash inflows and outflows. |
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