Entrepreneur's own savings

Usually used to finance a start ups

Main source of finance for sole traders

Personal funds are usually insufficient so they need more sources of finance

Value of profits that businesses keep after paying the government taxes and dividends to share holders

Used within the business

Used for capital expenditure

Kept in a contingency fund

Does not incur any interest charges

Businesses can sell dormant assets such as obsolete machinery and old equipment that has been replaced

raises finance through the sale of land and buildings

selling subsidiaries in response to a major liquidity threat to its survival

Money raised from selling shares in an LLC

Publicly held companies use initial public offerings (IPO's)

• share capital is the main source of finance for most LLC'S

• provide a huge amount of finance

publicly held companies cant sell shares to the general public

main functions of a stock exchange is to provide a market for second hand shares and government stocks

Privately held companies go public by floating their shares known as IPO's

Loan capital is a medium to long term source of finance obtained from banks

interest is either fixed or variable depending on the agreement

Predetermined period of time

Examples: Mortgages, business development loans, debentures

Financial service that allows businesses to temporarily overdraw on its bank account

Taking out more money than it has in the account

Most flexible form of borrowing for businesses in the short term

Demand high rates of interest

More cost effective than bank loans

Interest charged on the daily basis

Need for large cash outflow

Major disadvantage is overdrafts are repayable on demand from the lender

Allowed to postpone payments to suppliers can help to ease a firm;s cash flow problems

Allows businesses to postpone payments

"Buy now and pay later"

Sale is made at the time of the purchase

The seller or credit provider does not receive cash from the buyer until a later date

Way of raising finance from a large number of individuals for a small amount of money to finance a business venture or project

Online social media platforms

Charge for hosing such services

Donation crowdfunding; Contributions for which the business does not have to pay back

Heavily regulated in order to protect donors and to prevent fraud

Form of hiring where a contract is agreed between a leasing company and the customer

Pays rental income

Machinery, equipment, computers, motor vehicles, and buildings for short to medium term

Suitable for business customers who don't have the initial capital to buy such assets

The lessee is that repairs and maintenance are the responsibility of the lessor

Disadvantage: leasing is more expensive than hire purchase or the outright purchase of the asset

Sale and leaseback - businesses selling a particular fixed asset and immediately leasing the property back

Transfer ownership although the asset does not physically leave the business

Type of financial service aimed at entrepreneurs of small businesses

Providers enable disadvantaged members of society to gain access to essential financial services to help eradicate poverty

Finance is only available from unofficial money lenders at extremely high costs to the borrower

500 millions people have benefited from microfinancing

Extremely wealthy individuals who choose to invest their money in businesses that offer high growth potential

Firms that are unable to secure sufficient finance

Play a proactive role in setting up or running the business ventures

Examples of investments may go into high risk and high return business ventures

Might have to eventually have to buy out the stake owner by the business angel if they want to gain control

Their abundance of experience and financial backing are a major advantage to the companies survival and success.

They consider a number of criteria before committing

• Return on investments

• The business plan

• People

• Track record