factors affecting choice of finance Flashcards
(5 cards)
1
Q
what are terms of finance
A
determining the amount of the repayments and frequency at which they must be made.
2
Q
the business structure
A
ascertaining whether funds can be raised based on the business’s legal structure (companies can access more capital than sole traders).
3
Q
what is the overall cost
A
calculating the projected costs of each source of finance – easier to know how much a bank loan will cost over time when compared to borrowing money from a friend.
4
Q
what is flexibility
A
having the ability to change the terms of an existing financial agreement or exit it entirely as the business’s circumstances
change over time.
5
Q
what is level of control
A
considering whether the owner will retain control over business decisions if sourcing finances from elsewhere.
