external finance Flashcards
(12 cards)
what is external finance
generating money from outside the business
how many types of external finance are there
12
what does family and friends finance mean
when you borrow money from friends and family, this usually comes with low interest rates
what does a business angel mean
individuals who typically invest money in the business in return for equity
what is crowd funding
when individuals invest in the business via online
what is a lease
a contract to acquire the use of resources such as property or equipment
what is P2PL
where individuals lend to other individuals with our prior knowledge of them
what is share capital
money introduced into the business through the sale of shares
what is venture capital
when specialists invest in the business after the initial start-up
what is a bank overdraft
an agreement between the bank and business where the business can spend money it doesn’t have in the account
what is trade credit
where a business purchases goods and are given 30-90 days to pay back the money
what are the advantages of external finance
large amounts of finance can be raised, no loss of the business, low interest rates, more variety, no money is required up front
