MEDIUM TERM SOURCES OF FINANCE

BANK LOAN ADVANTAGES Can borrow large sums of money Can pay back in instalments Instalments are fixed – makes budgeting easier DISADVANTAGES Can be charge high rates of interest Difficult for smaller firms to obtain a loan due to high risk

LEASING ADVANTAGES Renting means you don’t need to pay out large sums of money at one time. Can change rented equipment when out of date. DISADVANTAGES Do not own the equipment out right. In the long term can be very expensive.

HIRE PURCHASE ADVANTAGES Spreads the cost of a large purchase Equipment is owned by the firm at the end of the hire purchase period DISADVANTAGES Expensive form of borrowing – interest is charged Goods are owned by the finance company until last instalment paid.