X+3.1+Sources+Of+Finance

= 3.1 Sources of Finance =

__KEY WORDS__ CAPITAL AND REVENUE EXPENDITURE INTERNAL v EXTERNAL SOURCES OF FINANCE (INTERNAL) Personal Funds, Friends&Family, Retained Profits, Working Capital, Selling of Assets. (EXTERNAL) Bank Loans, Overdraft, Trade Credit, Debt Factoring, Leasing, Hire Purchase, Debentures, Venture Capitalists, Business Angels (EXTERNAL) SHORT v MEDIUM v LONG TERM FINANCE (OTHER) Government Grants & Subsidies, Donations, Sponsorship, Share Capital

Key Issues :
 * Students are expected to be able to recommend the best source of finance for a given cost.
 * To do this you need to know...
 * (1) the different options available, and their relative dis/advantage
 * (2) the exact nature of the cost, considering various issues but in particular wether it is revenue or capital and how soon it will generate income and
 * (3) the exact nature of the borrower, their objectives and credibility.

MrM says //"A tricky but not impossible topic that is sometimes tested. Students get caught up revising the exact definitions and dis/advantages of each Source of Finance and forget to focus on the application of them."//

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