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- Higher interest rates
- Difficult to calculate borrowing costs
-The bank has the right to ask for repayment of your overdraft amount at any time

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Flexible - you only borrow what you need at the time which may make it cheaper than a loan

Quick to arrange

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permission for the transaction to go through when an account lacks the funds to cover a withdrawal (has to pay interest and one-time insufficient fund fee)

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They impose fees and penalties if you pay them lateLoss of suppliersCash flow difficulties

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Allows a business to raise funds based on the value owned by their debtors. The factor will buy the debts.

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A subsidy is a quantity of money given directly to companies, organizations, or individuals by the government.

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renting

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Discount for fast payments
Minimal cash outlay (doesn’t have to spend loads before selling)
Guaranteed supply of goods

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Financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.

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business person with a lot of money who provides financial banking for small startups or entrepreneurs

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Arrangement for the purchase of supplies without immediate payment

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Receive 90% of the money owed

Not good if the company has a lot of customers with poor credit ratings

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Improved cash flow

Immediate source of finance

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Higher taxes

Product shortages (When the government subsidizes some product, it causes the price to go down and consumption to go up.)

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loan for asset

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Lowering prices and controlling inflation

A greater supply of goods: Governments want to increase the access of their population to Goods & Services such as Water, Food, and Education.

Preventing the long term decline of industries: There are many industries that should be kept alive and functional, such as fishing and farming because they are essential to support a population. Many new and fast-growing industries may also benefit from being subsidized.

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form of stock payment or loan

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permanent shares

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No ownership-  At the end of the leasing period, the lessee doesn’t end up becoming the owner of the asset though quite a good sum of payment is being done over the years towards the asset.

The lessee remains responsible for the maintenance and proper operation of the asset being leased.

Complex process to get a lease (many documents)

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loan on a premise

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Money put in the business by the owner themselves. Personal funds is the money that one already has saved up, or has acquired from somewhere else.

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the percentage of net earnings not paid out as dividends, but retained by the company to reinvest into the business, or to pay off debt.

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Allows businesses to invest into good quality assets

Helps businesses maintain a steady cash flow as they don't have to make a large one time payment, it is spread out over time.

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- Loss of ownership - Generally need to give away ownership for funding.

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Rapid growth - Quickly create and expand the business

Quick market share

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- not suitable for investments below $10,000 or more than $500,000

- takes a long time to find an angel investor

- have to give up a share of the business.

- less structural support available from a Business Angel than an investing company.

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They are free to make investment decisions quickly

- They don’t need collateral (personal assets)

- no repayments or interest or delayed repayment

- Access to the investor’s sector knowledge and contacts

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If you fail to repay the loan, the lender can take possession of assets of the business or shutdown the business

If the interest is variable you may end up paying more than your loan

Possible high interest rates

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Repaying the loan is spread out over time into smaller amounts

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Interest is payable

Increases risk of company

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Lower interest rates compared to overdrafts

Payable in the remote future

Cannot be sold on stock exchange

Not considered a share so does not dilute shareholder equity

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Most people do not have enough money to pay in cash so a mortgage makes it possible

You only need to bring in a small down payment

Reduced in tax vs paying by cash

Having a mortgage on your home also means you’ve got more liquidity and less at risk

Forced to save each month

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Overall pays more due to having to pay interest vs paying by cash.

Sellers prefer cash > mortgage has less chance of backing out

You do not own the house till loans have been paid off.

You need to qualify for a mortgage and not everyone does.

30 years of monthly payment

You can lose your home if you fall behind on payment

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If a business fails, the owner could lose their home or other personal assets

Owner will have to develop their own contacts and developing opportunities

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Does not need to be paid back (permanent)

Can raise large amounts

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Selling more shares can dilute ownership for existing shareholders

Costly to set up sale

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If a business fails, the owner could lose their home or other personal assets

Owner will have to develop their own contacts and developing opportunities

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No established credit

Negotiate transfer of lease and contacts

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No liabilities for employees

Cost paid for assets are depreciable

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Lose value over time

Dividends = money paid to shareholders

Higher taxes = (but there is a possibility of tax breaks)

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Growth = improvement to existing product, market research, or develop new product.

Investment = source of further earnings