UNIT 1: RAISING FINANCE

LOAN CAPITAL is where a business is advanced set figure and repays the amount over an agreed period of time
1. OVERDRAFTS are arrangements between a firm and its band to withdraw more money from its bank account
  1. Advantages: simple, quick to arrange, flexible and convenient, they are also relatively cheap
  2. Disadvantages: can be expensive if used regularly for large amounts, they are also retable on demand
2. MORTGAGES are loans used to purchase land and buildings and are usually secured on such property
  1. Advantages: normally straightforward to arrange, no danger of the loan being recalled
  2. Disadvantages: less flexible, more expensive than overdrafts, mortgages especially have other initial costs
VENTURE CAPITAL is finance supplied by merchant banks, who usually expect to take a minority shareholding in the business for a set period of time
1. Advantages: most companies offer expert management support, find it easier to secure further funding
2. Disadvantages: can be complex, time consuming and issue of dilution of ownership and control
PERSONAL SOURCES of finance used to start up a business, might include, savings or loans from family and friends
1. Advantages: There are no interest payments as they are personal savings or from friends and family
2. Disadvantages: The owner carries financial risk if the business failed and
LEASING is where a business rents a fixed asset rather than purchasing it outright and where the ownership of the assets remains with the finance company
1. Advantages: provides flexibility when changing equipment, provides scope for updating and often accompanied by service package

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UNIT 1: RAISING FINANCE

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	Created by Alessandra Genco almost 11 years ago