2.1.2 EXTERNAL FINANCE

• Bank loan

  An external method of finance/money borrowed from a bank paid back, with interest (over a period of time)
• Business Angels

  Individuals who invest in a business in exchange for a stake in the business (shares)
• Crowd funding

  • An external source of finance where a large number of individuals provide funding for a business or project in return for shares/free products/discounts
  • Where large number of individuals can provide direct funding for a business or project which is administered by a website such as www.crowdfunder.co.uk
• External finance

  Money raised from outside the business
• Grant

  a sum of money given by a government or other organisation. It does not need to be repaid and no interest is charged
• Leasing

  A contract to acquire the use of resources such as property or equipment
• Loan

  An external source/method; amount of money borrowed, usually repayable after a fixed term of more than 12 months
• Overdraft

  When a business has a negative balance in their bank account because the amount withdrawn is greater than the current balance
• Peer-to-peer funding

  When a person lends money to other individuals or businesses via online transactions
• Share capital

  The finance raised a business issuing/selling of new shares
• Trade credit

  Where a firm receives stock/inventory/raw materials from a supplier, which it does not have to pay for until later
• Venture capital

  • External source of finance when the business issues shares to a small number of investor(s) in return for a capital injection into the company
  • Involves issuing shares to a small number of investor(s) in return for a capital injection into the company.