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:moneybag:Forms of Finance (Long Term (External (Loans :pencil2: (Can…
:moneybag:
Forms of Finance
Long Term
External
Loans
:pencil2:
Can receive amount immediately to use how ever you want and anyone can get one
/
must pay interest back over time
Mortgages
:house:
Low rate of interest
/
inflexible
Debentures
:lock:
Holders have fixed rate of return and get paid on set date
/
no voting rights and only used by plc's
Venture Capitalists
:silhouettes:
Can borrow as much money as they are willing to invest
/
loss of control and foregoing future profits
Government Finance and Grants
:no_entry:
Awarded to businesses in specific regions of high unemployment mainly. No to little interest on loans
/
Need to be failing or in undesirable circumstances in which risk is high
Internal
Share Capital
:beer_mugs:
Way of raising large amounts of capital
/
Give up ownership of company
Owners Capital
:<3:
Can receive amount immediately to use how ever you want and anyone can get one
/
must pay interest back over time
Short Term
External
Overdraft
:wastebasket:
Anyone can get one and are flexible
/
bank can call money back at anytime
Hire Purchase
:hand:
Equipment bought via a small upfront payment and monthly instalments after that, therefore not requiring all the money at once
/
can be more expensive than a direct bank loan, and the goods could be repossessed if they buyer falls behind in payments
Credit Cards
:money_with_wings:
Flexible and no interest charges within credit period
/
Risky and very high interest if period breached
Leasing
:handshake:
Allows businesses to use expensive equipment without the financial loss, which includes the maintenance and the cost of updating the model. It is also easy to obtain
/
more costly if used long term
Trade Credit
:truck:
Can pay for resources at a later date
/
costs of goods may be higher than buying them outright
Internal
Retained Profit
:champagne:
Can be used how ever you want and is ‘cheap’ due to no interest
/
can't be returned
Selling Assets
:pen:
Assets can be sold for a higher value than estimated
/
loss of equipment, property ect..