External sources:

• Equity finance involves selling shares in the business to investors in exchange for capital.


  True
• Grants are often provided for specific purposes
• Rank the following external financing options from least to most time-consuming:

  1️⃣ Grants

  2️⃣ Bank Loans

  3️⃣ Crowdfunding

  4️⃣ Equity Finance
• Crowdfunding requires a strong marketing plan because it relies on attracting a wide investor base.


  True
• Grants can boost credibility, but often have restrictive terms
• Equity finance involves selling shares in the business to investors in exchange for capital
• External sources of finance come from outside the business
• Why might equity finance dilute ownership?

  New investors gain shares
• Factors to consider when selecting external financing sources:

  1️⃣ Cost

  2️⃣ Repayment Terms

  3️⃣ Control

  4️⃣ Timing

  5️⃣ Risk
• Equity financing can reduce the business's level of control
• With bank loans, businesses maintain full control
• What are external sources of finance?

  Funding from outside the business
• What is crowdfunding?

  Raising money from many people
• What is a key disadvantage of crowdfunding?

  Requires strong marketing plan
• Grants are highly competitive and often have restrictive terms
• Rank the following external financing options from least to most risky for the business:

  1️⃣ Grants

  2️⃣ Crowdfunding

  3️⃣ Bank Loans

  4️⃣ Equity Finance
• What is a key advantage of crowdfunding?

  Wide investor base
• Grants are often provided for specific purposes.


  True
• What is a key feature of bank loans?

  Repayment schedule
• Match the external financing method with its advantage:

  Bank Loans ↔️ Provides capital

  Equity Finance ↔️ No repayment obligation

  Grants ↔️ No repayment required

  Crowdfunding ↔️ Wide investor base
• The cost of financing includes interest rates and fees.


  True
• The timing of financing should align with the business's funding needs.


  True
• Bank loans typically require collateral and incur interest
• Match the external financing option with its advantage:

  Bank Loans ↔️ Fixed repayment terms

  Equity Finance ↔️ No repayment obligation

  Grants ↔️ Boosts credibility

  Crowdfunding ↔️ Wide investor base
• Equity finance dilutes ownership but raises significant capital without repayment obligations.

  True
• Why is profit sharing a disadvantage of equity finance?

  Investors take a share
• What is a disadvantage of bank loans?

  Requires collateral
• Match the external source of finance with its description:

  Bank Loans ↔️ Borrowing money from a bank

  Equity Finance ↔️ Selling shares in the business

  Grants ↔️ Funding from government or organizations

  Crowdfunding ↔️ Raising money from many individuals
• What platform is commonly used for crowdfunding?

  Online platforms
• Equity finance requires profit sharing with investors.


  True
• Crowdfunding requires a strong marketing plan
• What does repayment terms refer to in financing?

  Time and schedule for repayment
• What type of risk is associated with crowdfunding?

  Marketing and campaign risk