8521458
Description
Mind Map by Sasha GoConqr, updated more than 1 year ago
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Created by Sasha GoConqr
over 7 years ago
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Short and Long Term Sources of Finance
- Owners personal finance: personal savings and money
borrowed from family and friends
- ADVANTAGES
- Reduces the amount to be borrowed from
other sources
- Allows the owner to be in control of the business
- Allows the owner to be in control of the business
- Reduces the amount to be borrowed from
other sources
- DISADVANTAGES
- Owner could lose his savings if the
business fails
- Owner could lose his savings if the
business fails
- SHORT
- ADVANTAGES
- Bank Overdraft: Allowing a business to spend more
money that it has in its bank account
- Advantages
- easy to set up
- Allows a business to continue paying expenses with no money in
the account
- Allows a business to continue paying expenses with no money in
the account
- easy to set up
- Disadvantages
- High interest rates are usually applied by the bank
for borrowing money this way
- High interest rates are usually applied by the bank
for borrowing money this way
- Advantages
- Government Grants: Money given to a business from the Government
- ADVANTAGES
- Money does not need to be repaid
- Money can be offered as a way to help the business expand
- Money can be offered as a way to help the business expand
- Money does not need to be repaid
- DISADVANTAGES
- Can be complicated to apply for as business needs to meet certain requirements
- Grants are usually one off payments
- Grants are usually one off payments
- Can be complicated to apply for as business needs to meet certain requirements
- LONG
- ADVANTAGES
- Bank Loan: The bank agrees to lend the
business money for a certain purpose for a
fixed period of time.
- Advantages
- A business can budget for
repayments
- Purchases of essential equipment can be made in advance and
paid back over a period of time
- Purchases of essential equipment can be made in advance and
paid back over a period of time
- A business can budget for
repayments
- Disadvantages
- Interest has to be repaid along with the loan amount
- Small businesses may find it more difficult to
secure a loan over a long period of time
- Small businesses may find it more difficult to
secure a loan over a long period of time
- Interest has to be repaid along with the loan amount
- Advantages
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