External Finance

Question 1

What is external finance

Answer 1

Funds raised outside the business

Question 2

What is venture capital/ private equity finance

Answer 2

A professiona investor that thinks your business will do well with hope of a good return

Question 3

Pros venture capital

Answer 3

Business receives good advice
Large sum of money
More connections

Question 4

Cons of venture capital

Answer 4

Loose control dependant an share percentage
Still have to pay it business fails

Question 5

What is trade credit

Answer 5

A business that buys Stan from suppliers immediately but pays later

Question 6

Pros of trade credit

Answer 6

Use stock before pay in full
Manageable time to pay

Question 7

Cons of trade credit

Answer 7

Paying late may affect relationship with supplies
No access to discounts

Question 8

What is selling shares

Answer 8

Felling a piece of the business to raise finance

Question 9

Pros of selling shares

Answer 9

More ideas
Large sum of money
Limited liability

Question 10

Cons of selling shares

Answer 10

May need to sell a lot of shares to raise finance
Everyone has to agree on the same decision
Selling shares can lead to a lack of control

Question 11

What is hire purchase/lease

Answer 11

When a business is allowed to use and asset over a fixed time in return for regular payments

Question 12

Advantages of hire purchase

Answer 12

Allows u to try the product b4 you pay full price
Manageable pay as paid in installments
Don’t have to worry about depreciation

Question 13

Cons of hire purchase

Answer 13

Asset can be seized if not paid on time
Liable for any damages
Not paying on time may affect credit score

Question 14

What is a bank loan

Answer 14

Money borrowed from the bank

Question 15

Benefits of bank loans

Answer 15

Large sum of money
Quick process once approved

Question 16

Cons of bank loans

Answer 16

Need to pay interest
Can suffer collateral if not paid
Approval needed

Question 17

What is loans from F&F

Answer 17

Money borrowed from friends and family

Question 18

Pros of loans from F&F

Answer 18

No interest
May allow more time to pay back
Quick process

Question 19

Cons of loans from F&F

Answer 19

May not be a large amount of money
Can ruin relationships if not paid on time

Question 20

What is a overdraft

Answer 20

When u are able to spend more money that the amount in ur account

Question 21

Benefits of over draft

Answer 21

Spend more money
Quick cash

Question 22

Cons of overdraft

Answer 22

Can affect credit score if not paid
Added interest
Abuse if it can lead to it being taken away

Question 23

What is a government grant

Answer 23

Financial reward provided by the government/charities/EU to support businesses

Question 24

Benefits of a government grant

Answer 24

Don’t need to be paid back
Competitive advantage
Government support
Large sum of money

Question 25

Cons of government grant

Answer 25

Proof needed that the business is giving out to the community One time funding Have to apply for the grant

Question 26

What is opportunity cost

Answer 26

A sacrifice of making once decision over another

Question 27

What is a business angel

Answer 27

Someone that gives money for a good cause without return