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External sources of finance, Daniel varela Ocampo A01707214 - Coggle…
External sources of finance
Business angels
Successful person who invests in new businesses
Long term
High cost
Likely loss of control
Suitable for: Start-ups
Venture capital
Financing that pools resources from investors to new businesses
Long term
High cost
No loss of control
Suitable for: Start-ups, Existing business
Share Capital
Money Raised through shares given to new investors in stock market
Short term
High or low cost, depends
May or may not be loss of control
Suitable for: Start-ups, Existing Businesses
Loan Capital
Funding that must be repaid (loans, bonds, stock) to investors
Medium or long term
High or low cost, depends
Likely loss of control
Suitable for: Start-ups (who know they can pay back)
Credit Cards
Allows someone to borrow money and pay it over time
Medium or long term
High cost
May or may not be loss of control
Suitable for: Any profitable Business
Back overdrafts
It is a very high amount of money or loan
Short term
High cost
Likely loss of control
Suitable for: Successful businesses with no need for immediate funding
Subsidies
Designed to increase production of beneficial goods for society. Usually provided by government
Short term
High or low cost, depends
No loss of control
Suitable for: Any business in need of funding
Grants
Loan with no interest and no need to be paid back. Given by government if business helps community
Short term
High or low cost, depends
No loss of control
Suitable for: Any business that helps community that needs funding
Grants or philanthropic organizations
Governments or wealthy people provide social funds with low payback interest
Short term
high or low cost, depends
No loss of control
Suitable for: Any business that helps community that needs funding
Trade credit
Company receives goods but pays later
medium term
Low cost
Likely loss of control
Suitable for: Any business that can pay back in time
Debt Factoring
Costumers with credit and no settled account
Short term
High or low cost, depends
No loss of control
Suitable for: any business with debtors and can benefit
Leasing
Businesses lease assets instead of selling them
Long term
Low cost
Likely loss of control
Suitable for: Any business in need of assets but no money to get them
Daniel varela Ocampo A01707214