8 - Raising Finance

Question 0

External sources of finance

Answer 0

Those that are outside the business, such as banks and shareholders.

Question 1

Internal sources of finance.

Answer 1

Finances raised from within the business.

Question 2

Overdraft

Answer 2

A temporary arrangement which allows the business to draw out more money than is in its account, up to an agreed limit.

Question 3

Loan

Answer 3

A good source of finance for assets such as machinery and equipment and other start-up costs.

Question 4

Incorporated

Answer 4

The process of forming a limited liability company.

The process involves creating a separate legal identity for the business, and the creation of shares, or equality.

Question 5

Venture capitalist

Answer 5

Usually a professional investor, often another company, interested in high growth, high risk business, who will invest an amount into a business in return for shares, and an expire ration for a high return.
Venture capitalists are usually interested in larger investments of around £250,000 or more.

Question 6

Business angel

Answer 6

A wealth you, entrepreneurial individual willing to invest in small, high risk business who expects a high return.
The business is likely to have a high growth potential.

Question 7

Crowd funding

Answer 7

The practice of funding a new business by raising small amounts of money from a large number of people, typically via the internet.