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3.2: Finance Sources, Sales of Assets - Coggle Diagram

- - - - No interest payments to shareholders: reduce expenses
      - Public LLC issue shares: more finance
      - Permanent Capital, not to be repaid
    - - Less & Reduced: Ownership & Control
      - Only Public LC trade using stock market
      - Pay dividends to SH if profit
  - - - Ads
        
        Usually available lower interest rate (Financial EoS)
        
        Suitable to raise finance without use of SH
        
        Repay regular instalments: affordable
      - Disads
        
        Interest charged: total loan cost increased
        
        Mostly offered security before approving & failure to repay = lender legal ability sell firm's assets = pay outstanding debt
        
        Variable interest rate? Potential liquidity issues if interest go up
  - - - Ads
        
        Quite easy to access & important to access for small businesses
        
        Emergency Fund to finance operations if liquidity occurs
        
        Flexibility: as its used when needed
      - Disads
        
        Lend small amount for business continue operating
        
        To be paid back short-time = high cost & short-term loan
        
        Interest charged
  - - - Lessor not purchase expensive on capital; instead use money to revenue expenditure
      - Useful if business only need to use fixed capital for time, and not deal with maintenence & repairs
    - - After time: leasing more expensive than buying assets
      - Lessor only owns before, during & after contract
  - - - Ads
        
        Help get out poverty by making financially independant
        
        Help support entrepreneurs small business
        
        Act socially responsible helping poorest & most vulnerable
      - Disads
        
        Interest charges on loans: expensive for small business owners: struggle to earn
        
        Increases debt who struggles to run business
        
        Finance provided on small scale: usually not enough
  - - - Funds not easily available for small business/start-ups & many people competing for large funds
      - No guarantee angel investors to earn good ROI
      - For Angels, business ventures extremely high risk; risk losing personal money
      - Business Angel want: ownership & control & share
    - - Benefit from expertise of Business Angels: Secure ROI
      - Useful small business & inexperienced enterpreneurs: not able secure enough finance
      - Provide finance for start-ups
- - - - No repay
      - No interest charges
      - Better chance borrow if need: shows greater commitment to business
      - Cheaper option: but usually fund LIMITED
    - - Sole Trader: high risk; less likely to secure ES == rely on IS
      - Rarely enough for small business
      - Entrepreneur risk entire life saving in business venture & all money lost if business venture fail
  - - - No interest charges
      - Permanent finance source: not have to be repaid & no result debt
      - Greater flexibility to use RP: use for anything
    - - Start-ups no any RP: impossible finance source to create new business
      - Rarely enough: most business want growth & evolution
      - Use RP Funds: to grow business == less dividends paid to SH & Owners