1. Theory on Sources of Finance For Lesson 9

2. Sources of Finance  Some sources of finance will be available as soon as the business starts up  Some sources are only available in the longer term

3. Finance available from the start  Money put in by the owners (owners capital)  Bank loans(interest will have to be paid)  Grant from the Government  Hire Purchase  Leasing (renting equipment can save money)  Trade credit  Venture Capital - getting another business to “take a risk” on your business and invest some money

4. Finance available in the long term  Bank Overdraft  Retained Profit (profit made in earlier years that is re- invested back into the business)

5. Companies - Ltd and PLC  These companies are also able to raise money by issuing shares.  Also debentures can be issued – certificates issued by companies acknowledging their debt. Debt is paid at a fixed rate of interest. These can be traded on the stock exchange.

6. Short – Medium – Long Term  An organisation needs to match the source of finance to the time period they require it for, e.g.  Long term – mortgage for buildings  Medium term – loan for new machines  Short term – trade credit to buy materials

7. Video to watch  http://www.bbc.co.uk/learningzone/clips/financing-a- business/10960.html http://www.bbc.co.uk/learningzone/clips/financing-a- business/10960.html  http://www.youtube.com/watch?v=5ll0mKg6-yI http://www.youtube.com/watch?v=5ll0mKg6-yI