Sources of Finance

owner's savings

use their own personal savings to start the business

interest does not to be paid

business remains totally in the control of the owner

capital from profits

government grants and Prince's Trust loans and grants

money given to an entrepreneur that does no have to be paid back

amount of the money will depend on where it is coming

Subtopic

friends or family

money from friend and family may either invested in the business in exchange

share issues

raise finance

not offered publicly but business contacts, friends or family can buy them

known as floating on the stock exchange

factoring

sells it debts to anothe rcompany and receives some of the money immediately

collects the debts and takes a percentage cut for this service

venture capitalists

invest in new and up-and-coming risky ventures

return for a share of the ownership

leasing

make use of resources and pay to use them every month

does not owned the goods at the end of lease

hire purchase

used by the business while they are being paid for to a finance company

goods are not owned by the business

finance company can take them back if payments are not made

builing societies

offer loans

business accounts

commercial mortgages

overdraft facilities based on the business plan

interest is payable based on the risk

security

assets

banks

commercial mortgages

overdraft facilities

interest payable based on the predicted risk

security

assets such as a house