Sources of Finance LVIth B by https://padlet.com/nicholas_chadwell/gcod1mine426 Benefits and Drawbacks en-us 2019-01-14 10:19:59 UTC 2019-01-17 08:52:16 UTC hello@padlet.com Instructions nicholas_chadwell https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320233514 Please write your Benefits and Drawbacks of each of your sources of finance on the padlet below. It then needs to be copied up onto your table.]]> 2019-01-14 11:28:11 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320233514 Loans from friends and family https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320653187 1Benefits
- A loan from friends and family usually has lower interest rates
-Easy and flexible
-Family members or friends are likely to agree on the loan

2 Drawbacks
-can cause issues between family members and they can fall out if the money is not payed back
- The family member loaning the money may feel they have authority in the business
- people usually think that loaning money from friends and family as an informal transaction however this lack of clarity .


]]> 2019-01-15 08:36:55 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320653187 bank overdraft https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320653235 +
flexible only have to borrow what you need
easy short term finance solution 

-
high rates of interest on the money
only pay interest on anything below £0
can't be used for large amounts of borrowing ]]> 2019-01-15 08:37:08 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320653235 Business angels. https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320653371
  • Advantages. - They often offer their own skills, experience and contacts.
    • -  Due to there only being one investor, there is no conflict between all of the voices.
    - There is a low interest on money invested.
    2. Disadvantages - It takes a long time to find a specific angel who is willing to invest.
    - If the business isn't successful, the angel's would withdraw the money you have already spent.
    - The angels might not be able to invest as much as you want.
    Ben xx

    ]]>     2019-01-15 08:37:42 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320653371     Share capital https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320655773 Money invested in a company by the shareholders. 
    Advantages 
    -Shareholders have the protection offered by limited liability. Only liable for the amount they invest. -Is a long-term source of finance. -can be very flexible, as business has control of sale and initial amount.
    Disadvantages 
    -Less control of the company. Have right to vote on business deals. -If company goes bankrupt shareholders expect higher rate of return.
    -Even though can sell shares after first sale loses value of shares and can anger existing shareholders. 
    ]]>     2019-01-15 08:47:58 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320655773     government grants https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320656197 a sum of money given to an individual or business for a specific project or person 

    + 
    they don't have to repay the grant

    they're readily available from a variety of different sources

    a good way of building the organisations credibility 

    -

    ]]>     2019-01-15 08:49:35 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320656197     Peer to Peer Funding https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320656523 Individuals can borrow money from unrelated individuals

    Benefits
    -No intermediary required (a middle man)
    -Easily accessible to borrow money, as it is online
    -Short term, instant cash

    Drawbacks
    -Large sums of money are not available
    -No insurance, no form of protection to the investors.
    -Money might not get paid back (Credit Risk)]]>     2019-01-15 08:50:42 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320656523     Retained Profit https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320662079 Profits earned by the business that are kept and potentially reinvested.

    Benefits:
    - low cost
    - the owners are in charge of how they are used
    - does not involve debt

    Drawbacks:
    - A start-up business needs to reach break-even point before profits can be earned
    - The level of retained profits may not be large enough to meet their financial needs
    - Waiting for retained profit to accumulate can mean losing potentially profitable business opportunities]]>     2019-01-15 09:15:12 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320662079     leasing= gracie_moorhead https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320662874 a popular method of financing, it is an alternative to buying the asset outright. e.g equipment like machinery

    advantages 
    + there is no capital outlay so it can be a big help to cash flow
    +avoids large chunks of cash outflow
    +have access to higher standard

    disadvantage 
    -long term it is more expensive 
    -if a business leases equipment they are not the owner of it
    -when your involved with leasing you are tied into a conract ]]>     2019-01-15 09:19:06 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320662874     Venture capital https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320725177 Venture capitalists look to invest large sums of money in return for a share of the company, operating through a high risk for high reward scenario. 

    Benefits: 
    - Investors will support and manage the company through knowledge and experience 
    -Will raise substantial amounts from specialist investors 
    - Unlike banks, venture capitalists are easily attracted to high risk businesses (start-up businesses) 

    Drawbacks: 
    -Investors will only invest for a high rate of return 
    -Short - medium term investors will aim to sell their investment after around 5 years 
    -Business owners lose control of the business if their stake is over 50% ]]>     2019-01-15 12:59:23 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320725177     Banks https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320863452 A financial institution authorised by a government to provide financial services to its customers e.g. accepting deposits

    Benefits:
    - services are helpful to both new and established businesses
    - Flexibility, only need to worry about making regular instalment payments on time and not like overdrafts which you pay back instantly
    - No limit on the size of the loan

    Drawbacks:
    - Usually require collateral as a form of security
    - must make periodic payments and if you fall behind, there's risk of having your asset seized
    - Banks with variable interest rates because of market conditions or internal conditions, the rates can change meaning it's hard to determine the exact amount of future payments]]>     2019-01-15 16:50:28 UTC https://padlet.com/nicholas_chadwell/gcod1mine426/wish/320863452