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Business help, easy question (1 Viewer)
- Thread starter omarr
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~ ReNcH ~
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Sources of finance incorporate institutions from which a business can borrow money (debt finance) or people who are willing to invest in a business (equity finance).
Debt finance may include bank loans, mortgages, overdrafts and virtually anything that you must repay (often with interest).
Equity finance may include retained profits or investments by shareholders. You don't have to repay this, but you are generally expected to pay dividends if your business is generating profits.
Debt finance may include bank loans, mortgages, overdrafts and virtually anything that you must repay (often with interest).
Equity finance may include retained profits or investments by shareholders. You don't have to repay this, but you are generally expected to pay dividends if your business is generating profits.
You can also have internal and external sources of funds. Internal are Retained profits and owners equity, external are overdrafts, bank loans, mortgages. there are some sources of funds just classified as "other" these include venture capital and grants etc
Factoring and leasing, and debentures
Factoring and leasing, and debentures
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~ ReNcH ~
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And in relation to what shellybelly said, debt finance is generally considered to be an external source, while equity finance is considered to be an internal source of finance.