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Types of Finance (Debt (Debt is money that is borrowed from other sources)…
Types of Finance
Debt
Debt is money that is borrowed from other sources
Advantages
No additional owners to share profit with.
Establishes a credit history.
No risk of other owners taking over business.
Disadvantages
There are usually high interest rates.
No additional owners to expand skill.
Long Term Examples
Term Loan
Mortgage
Short Term Examples
Overdrafts
Trade Credit
Leasing
Equity Finance
Equity finance is money that comes from the shareholder's personal account
Advantages
No interest
May attract more owners with more skills
Disadvantages
More people to share the profit with.
Other owners make end up taking over the business.