Sources

OF FINANCE
Comes from their
personal savings
Long-term
s a v in g s
Owner's loan for
purchase of
land or Interest is
Money the
charged on

Interal
No interest charges buildings
entrepreneur Mortage
saved up applied
Extermal Must be paid each
amount
borrowed

year
rm
g -te
Remaining profit n
Lo ance
Agreement
d business's
R e t a in e
Share issue
after all expenses Some of with bank
fin
apital Overdraft
and distribution
p r o f it s working c Bank loan
among dividends Short-ter
Sales m Debenture
of non finance
curren - Reduced Hire purchase
Sale and t asse
sts Cash inventory Allows
Remained profit is leaseback Trade Source of
balances levels withdrawal
reinvested Used for Reduced credit Leasing permanent
of money Bank
funding trade Bond capital
greater provides
capital issued by available
receivables than the Debt factoring finance Similar to
a to limited
expenditure Sale of balance of which will leasing but
Amount Business buys company liability
projects Non- unwanted Reduce their be repaid business
of goods on to raise companies
current non-current materials, account with Getting will own
account, long-term
asset sold money interest asset when
assests components usage of finance
on hand paying the over an all
No cost to (ex.land) (ex.machine Customers non-current
or finished supplier at a Trade agreed payments
business and asset s,buildings) receive asset by
goods later receivables time are made
is leased paying a
Available only goods and scheduled sold to
back holded fixed
when business pay at a date improve Company
amount per
is profitable set date in Flexible liquidity time period can offer
Cannot the future source for fixed to sell
Leasing
spend all of period of After shares up
charges could Limitation:
cash to finance Variable time buying to a
increase expensive
finance Fixed interest rate bond maximum
No direct Longer
Business interest buyer number
cost to capital credit terms
spending gets rate gets fixed
business Business negotiated = rate of
reduce increase immediate
interest
length of short-term cash
But, leasing per year
time to Used only to finance Can rise or Interest
charges could But buyer Asset not
Risking not wait for meet short- Reduces fall charges are
increase and has to be owned by Capital
being able to payment term cash risk to depending business and higher than raised
future fixed searched for
pay day-to- shortages business on can be other becomes
costs will day expenses of economic finance Security permanent
Debt-factoring returned
increase increased factors back options provided so capital
company
costs debenture
receives
holder is
Total accounts receivable customer's full guaranteed
payment Leasing company
are reduced so business's money back
responsible for repairs
cash balance increases
of asset