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Sources of finance (An overdraft allows the business to continue…
Sources of finance
An overdraft allows the business to continue withdrawing money even if the account has no funds in it or not enough to cover the withdrawal.
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If you don't pay the bank back, your overdraft can be limited
A disadvantage is that there is a maximum that a bank allows a business to borrow and this is called an overdraft limit.
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Retained Profit
Availability
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Business making a loss or breaking even would not be able to use retained profit as a source of finance
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Bonds
A loan where typically interest is paid at regular intervals like a year and the loan is all repaid at the end of the life of the bond.
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Share
A part ownership in a business for example a shareholder owing 25 per cent of the shares of a business owns a quarter of the business.
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