1.3.4 Sources of Business Finance

• What does business finance refer to?

  Funds for business activities
• Match the area of business finance with its purpose:

  Starting a Business ↔️ Covers initial expenses

  Operating Costs ↔️ Pays for daily expenses

  Business Growth ↔️ Finances expansion projects
• Angel investors provide expertise and networking
• Venture capital firms specialize in funding startups
• Retained earnings are profits kept for reinvestment.


  True
• Grants are provided without repayment obligations.


  True
• Investment from the owner's own funds is known as personal savings
• Grants require repayment with interest.

  False
• Internal sources of finance require repayment with interest.

  False
• Grants are easy to obtain for any business activity.

  False
• Crowdfunding can help build brand awareness for a new product.


  True
• Business finance is needed to start, operate, and expand
• Order the following sources of business finance based on risk and potential return:

  1️⃣ Personal Savings

  2️⃣ Loans

  3️⃣ Grants

  4️⃣ Crowdfunding

  5️⃣ Venture Capital
• What is a key benefit of crowdfunding?

  Wider investor base
• What is the difference between internal and external sources of finance?

  Internal from within, external from outside
• Each source of finance has its own unique advantages and disadvantages
• Venture capital investments require high expectations for returns
• What is a key characteristic of a loan as a source of finance?

  Structured repayment terms
• Match the source of finance with its characteristic:

  Angel Investors ↔️ Mentorship and networking

  Venture Capital ↔️ Large funding potential

  Crowdfunding ↔️ Wide investor base
• Money from selling surplus property is an example of sale of assets
• Venture capital firms often expect high returns in exchange for their investment
• Business finance is used only for initial expenses.

  False
• Grants require repayment with interest.

  False
• Match the source of finance with its characteristics:

  Personal Savings ↔️ No repayment required

  Loans ↔️ Structured repayment terms

  Grants ↔️ No repayment needed

  Crowdfunding ↔️ Raises funds online
• Match the source of finance with its type:

  Retained Earnings ↔️ Internal

  Bank Loans ↔️ External
• What is a key disadvantage of personal savings as a source of finance?

  Limited availability
• Order the following areas of business finance based on their purpose:

  1️⃣ Starting a Business

  2️⃣ Operating Costs

  3️⃣ Business Growth
• Funds provided by the government or organizations are called grants
• Categorize sources of finance as internal or external:

  1️⃣ Retained Earnings (Internal)

  2️⃣ Sale of Assets (Internal)

  3️⃣ Bank Loans (External)

  4️⃣ Venture Capital (External)
• What is a key feature of venture capital as an external source of finance?

  Equity dilution
• What is a key disadvantage of crowdfunding?

  Requires significant marketing