Capital and revenue income and expenditue

• CAPITAL INCOME:

  Loan Money lent to a business or owner by a bank or financial institution for a period of time. Often long term (2 or 3 years+)
• Loan advantages:

  • Large, lump sum of money received quickly

  • Paid back in instalments over time

  • Can fix the interest rate or take variable
• Loan disadvantages:

  • Interest is charged on top

  • Loans may need to be secured against an asset

  • Variable rates may go up
• Mortgages A longer term loan specifically for property purchases. 25 years
• Mortgage advantages:

  • Paid over a long period

  • Interest rates can be low
• Mortgages disadvantages:

  Secured against the asset/property

  • Can be repossessed if failure to pay.

  Interest rates can rise
• Shares Part ownership of a company, giving rights and potential share of profits.
• Shares advantages:

  • Raises money required

  • Can bring in support & expertise
• Shares disadvantages:

  Lose some ownership of the business/control/profits
• Owners’ Capital Savings or personal finance brought to the business by the owner