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Finance Options (Private limited (Issue Shares (Pro: Can avoid paying…
Finance Options
Private limited
Equity/ Share Captial
Issue Shares
Pro: Can avoid paying dividend, have to pay interest
Disadvantage: Dilution of Control
Retained Profit
Disadvantage: Share holders might not approve if no divided is paid
Pro: Does not draw as much attention as issuing shares
Long term loans
Disadvantage: Could pay a lot of interest if not fixed
Pro: Cheap and easy to set up
Mortgage
Pro: Low interest rate
Disadvantage: Arrangement fees and interest rates are not set for term
Finance Lease (Company owns asset but allows company to sue it
Easy to obtain
Assets taken if defualt
Venture Capital
Pro: Big Money
Dilution of Control
Business Angles
Pro: Skill
Dilution of control
Public Limited
Equity/ Share Capital
Issue Shares
Retained Profit
Pro: Does not draw as much attention as issuing shares
Disadvantage: Share holders might not approve if no divided is paid
Long term loans
Pro: Cheap and easy to set up
Disadvantage: Could pay a lot of interest if not fixed
Mortgage
Pro: Low interest rate
Disadvantage: Arrangement fees and interest rates are not set for term
Venture Captial
Pro: Big investment
Disadvantage: Dilution of control
Business Angles
Pro: Skill
Disadvantage: Dilution of Control
Sole Trader/ Partnership
Internal
Retained Profit
Pro: Does not draw as much attention as issuing shares
Disadvantage: Share holders might not approve if no divided is paid
Extra sales
Working Cap
External
Bank Loans
Long term loans
Disadvantage: Could pay a lot of interest if not fixed
Pro: Cheap and easy to set up
Bank Overdraft
Pro: Very easy to set up
Con: High interest
Hire Purchase/ Leasing
Medium Term
Finance/ Hire Purchase (Car)
Disadvantage: High interest, unless bargaining power
Penalties for paying early
Advantage: Option to own vehicle