# data[].attributes.body
Definition- legal agreement given by a bank or business society etc lends money at interest in exchange for taking the title of the debtor’s (someone who owes money) property. refers to a loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments that are divided into principal and interest.

Internal/External-external finance resource

S/M/L-Long term source of finance, Long-term financing sources include both debt (borrowing) and equity (ownership). Equity financing comes either from selling new ownership interests or from retaining earnings. Financial managers try to select the mix of long-term debt and equity that results in the best balance between cost and risk

Advantage-

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 fewer at risk

Forced to save each month

Disadvantage-

Overall pay 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 payments

# data[].attributes.body
+ Definition: A loan that is not secured by physical assets or collateral and may be used for revenue expenditure or short-term payments.

+ External source of finance

+ Long term (5 years +)

+ Advantages:

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

+ Disadvantages:

Interest is payable

Increases risk of company

# data[].attributes.body
Definition-A has written or implied contract by which an owner (the lessor) of a specific asset (such as land, building, equipment, or machinery) grants a second party (the lessee) the right to its possession and use for a specific period and under specified conditions, in return for specified rental or lease payments. Loan capital is funding that must be repaid. This form of funding is comprised of loans, bonds, and preferred stock that must be paid back to investors. Unlike common stock, loan capital requires some type of periodic interest payment back to investors for use of the funds.

Internal/External-external finance resource requires return back and it is money comes from outside of the business

S/M/L-it is a short-term finance resource for a company since it provides cash flow in a short amount of time.

Advantage-

Allows businesses to invest in 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.

Disadvantage-

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.

The complex process to get a lease (many documents)

# data[].attributes.body
Definition: Money obtained through the sale of a businesses' shares.

External, Long term source of finance

Advantages:
- Shares are sold for a large sum of money
- No interest requierments
- Business does not need to pay dividends in case of loss

Disadvantages:
- Dividends need to be paid if company is in profit
- Loss of control to a certain extent, depends on how many shares a business has sold, shareholders have a say in the companies decision if shares sold are significant.

# data[].attributes.body
Definition: Firms that invest in new, small businesses that have high growth potential and high profitability.

External source, can be short medium or long

Advantages:

- Large sum of money given which can help a business idea come to life
- Guidance is also provided by Venture capital firms

Disadvantages:
- Venture capital firms have high expectations and can be very controlling

# data[].attributes.body
+ Definition: An informal investor that provides capital for a start up business in exchange for convertible debt or ownership equity. Eg: personal friends and family, wealthy business contacts, major suppliers and clients of the business

+ External source of finance

+ S/M/L term (could be anything)

+ Advantages:
- 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

+ Disadvantages:
- 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.

# data[].attributes.body
+ Definition: A written or implied contract by which an owner (the lessor) of a specific asset (such as land, building, equipment, or machinery) grants a second party (the lessee) the right to its possession and use for a specific period and under specified conditions, in return for specified rental or lease payments.

+ External source of finance

+ Short, Medium, Long term (could be anything)

+ Advantages:

Allows businesses to invest into good quality assets

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

+ Disadvantages:

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)

# data[].attributes.body
Definition-  Money put in the business by the owner themselves. Personal funds are the money that one already has saved up, or has acquired from somewhere else. personal funds also come from one specific individual

Internal/External-personal funds is an internal source of finance it comes from the owner's personal savings or one individual's income This source of finance does not cost the business, as there are no interest charges applied.

S/M/L-personal savings are short-term sources usually up to 12 months.

Advantage-Very quick and easy to use, efficient for short-term problems Avoid having to pay the money with interest to a lender.

Disadvantage-There is no guarantee on a return on the money that is invested

# data[].attributes.body
Definition-Financial service that allows a business to raise funds based on the value owned by their debtors. The factor will buy the debts.

Customers who buy on credit fail to pay on time

Customers who attempt not to pay at all

Internal/External-it is an external source of finance with debt factoring, a business can raise cash by selling their outstanding sales invoices (receivables) to a third party (a factoring company) at a discount.

S/M/L-short term finance resources

Advantage-improved cash flow
Immediate source finance:24 hours vs 30 days from customers

Disadvantage-risky, Receive 90% of the money owed

# data[].attributes.body
Definition: Money left over after business has paid all costs or dividends to shareholders

Internal, and can be short, medium, or long term

Advantages:

- Owner has the autonomy to use the retained profits to his liking
- Funds are easily accessible

Disadvantages:

- Shareholders may be unhappy with retained profits going back into the company
-Small firms don't have sufficient retained profits

# data[].attributes.body
+ Definition: A source of finance where a business can sell their unused assets like old machinery, or computer equipment that has been replace.

+ Internal type of finance

+ Short term (up to 1 year)

+ Advantages: Value of assets can appreciate over time, Proceeds can be used to pay off debts

+ Disadvantages: Sometimes the value of the asset can depreciate and the firm won’t get the full value of the asset

# data[].attributes.body
+ Definition: Overdraft financing is provided when businesses make payments from their business current account exceeding the available cash balance.

+ External type of finance

+ Short term (up to 1 year)

+ Advantages:

1. Handles timing of mismatch of flow of funds

2. Maintains good track record

3. Timely payments

4. Flexible

5. Less paperwork

6. Benefit in interest cost

+ Disadvantages:

1. Higher interest rates

2. Risk of reduction limit

3. Risk of seizing

4. Debtors collection becomes lethargic

# data[].attributes.body
Definition: Financial assistance offered by the government, in the form of grants( large sum payments). Governments do so to encourage business activity, and to promote economic policies.

External source of finance which can be short, medium or long term

Advantages:
- Businesses don't have to pay back the government, it is more of a gift which enables companies to pay back their debts, and re-invest into the company.
- Positive relationships are created between the government and businesses

Disadvantages:
- Grants are very difficult to obtain by companies, as there are multiple government requirements that a business needs to meet
- A lot of other businesses are in pursuit of grants as well, therefore there is competition
- Sometimes the amount given by the government is insufficient.

# data[].attributes.body
Definition: An interest free loan, usually provided by suppliers than enables a business to obtain supplies now, and pay later.

External, short term source of finance

Advantage:

- No interest
- Allows a business to generate money through the free supplies to pay back later
- Discounts are given out by suppliers to the businesses that pay early

Disadvantage:

- Business has a deadline in which it needs to pay back the supplier
- Failure of business to pay back supplier on time may face legal action, or damage relationship