External sources:

• External sources of finance are sources of funding that come from outside the business rather than being generated internally.
• Match the external source of finance with its description:

  Bank loans ↔️ Borrowing money from a bank

  Overdrafts ↔️ Line of credit from a bank

  Leasing ↔️ Renting equipment or property

  Venture capital ↔️ Investment in exchange for equity
• Bank loans typically come with interest and a repayment schedule.
• Venture capital involves investment from professional investors in exchange for an equity stake.
• Overdrafts provide short-term, flexible financing without the need for collateral.


  True
• Crowdfunding often uses online platforms to raise funds from a large number of people.

  True
• Crowdfunding backers may expect rewards or returns on their investment.


  True
• Match the source of finance with its description:

  Bank loans ↔️ Borrowing money with interest

  Overdrafts ↔️ A line of credit from a bank

  Leasing ↔️ Renting equipment or property
• Steps to access external sources of finance for a business

  1️⃣ Identify financial needs

  2️⃣ Research available sources

  3️⃣ Prepare a funding proposal

  4️⃣ Apply for funding

  5️⃣ Negotiate terms
• Match the external source of finance with its key feature:

  Bank loans ↔️ Fixed repayment schedule

  Overdrafts ↔️ Flexible, short-term financing

  Crowdfunding ↔️ Access to many small investors
• What type of expense are lease payments considered?

  Operating expense
• Match the source of finance with its characteristics:

  Bank loans ↔️ Typically have interest and a repayment schedule

  Overdrafts ↔️ Flexible, short-term financing

  Leasing ↔️ Payments are operating expenses

  Venture capital ↔️ Investors receive an equity stake

  Crowdfunding ↔️ Can be equity or reward-based
• The overall costs associated with different financing sources vary significantly.


  True
• Venture capital involves investors who share the risk of the business.


  True
• Crowdfunding involves raising funds from a large number of people through an online platform.
• Leasing allows businesses to avoid large upfront costs for assets.


  True
• What are the typical features of bank loans as a source of external finance?

  Interest and repayment schedule
• What do investors receive in exchange for providing venture capital to a business?

  Equity stake
• Why do venture capital investors share risk with the business they invest in?

  To ensure growth
• External sources of finance enable businesses to fund growth and investments.


  True
• Leasing payments are treated as operating expenses
• Overdrafts require collateral or security.

  False
• External sources of finance allow businesses to access capital that cannot be generated internally.


  True
• Venture capital investors gain influence over the business
• External sources of finance offer flexibility in financing options.
• Bringing in external investors dilutes ownership and control
• External sources of finance allow businesses to fund growth or investment activities.


  True
• What is an overdraft?

  A line of credit
• What is crowdfunding?

  Raising funds from many people
• Leasing allows businesses to access assets without large upfront costs
• Match the source of finance with its advantage:

  Bank loans ↔️ Fixed repayment schedule

  Overdrafts ↔️ Flexible, short-term financing

  Leasing ↔️ No large upfront cost
• External sources of finance are sources of funding that come from outside the business.
• What is the primary characteristic of venture capital as a source of finance?

  Equity stake for investors
• Why are overdrafts considered a flexible source of short-term financing?

  No collateral required
• Bank loans typically have interest and a repayment schedule
• Crowdfunding can be equity-based or reward-based
• What is the primary advantage of leasing equipment instead of buying it outright?

  No large upfront cost
• Order the following external sources of finance from the most to least flexible in terms of repayment terms:

  1️⃣ Overdrafts

  2️⃣ Bank loans

  3️⃣ Leasing

  4️⃣ Venture capital

  5️⃣ Crowdfunding
• What is a common disadvantage of external financing?

  Interest payments