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# Business Finance Options This document appears to be notes about different methods of financing a business. It outlines advantages and disadvantages for each method. ## Financing Options Here's a summary of the financing options discussed: **1. External Sources of Finance** * **Bank Loans:**...

# Business Finance Options This document appears to be notes about different methods of financing a business. It outlines advantages and disadvantages for each method. ## Financing Options Here's a summary of the financing options discussed: **1. External Sources of Finance** * **Bank Loans:** * **Advantages:** Rigid agreement; overdrafts may allow spending more than deposited; usually used to acquire machinery or equipment * **Disadvantages:** Costs interest, expensive, risk of not being able to make payments leading to loss of property. * **Government Grants:** * **Advantages:** No repayment required; funding for specific projects or expansion; avoids interest payments * **Disadvantages:** Strict eligibility criteria; specific funding purposes. * **Hire Purchase:** * **Advantages:** Access to assets without immediate large payments; useful for business expansion * **Disadvantages:** Monthly interest payments; expensive. * **Leasing:** * **Advantages:** Access to assets without immediate large payments; useful for improving cash flow * **Disadvantages:** Monthly interest payments; expensive. * **Mortgage:** * **Advantages:** Acquire property without needing high amounts at once; secured against specific property * **Disadvantages:** Interest payments; potentially lose property. * **Share Issue:** * **Advantages:** No interest payments; Avoid costly interests on loans * **Disadvantages:** Share profits; give up some ownership. * **Traditional Partners:** * **Advantages:** Shares expenses and responsibilities; more diverse expertise; avoid high interests/loans * **Disadvantages:** Giving up ownership/share profits **2. Internal Sources of Finance** * **Personal funds:** * **Advantages:** More flexibility; personal enjoyment; avoid loss of property * **Disadvantages:** Limited amount * **Trade Credit:** * **Advantages:** Flexible payment terms; can give time to increase sales; negotiating longer payment terms * **Disadvantages:** Suppliers may become annoyed if payment period is too long and they may be required to give a discount * **Overdraft:** * **Advantages:** Flexible borrowing option/allows for more expenditure until next payment is due * **Disadvantages:** Interest charges and borrowing limit The document also contains notes on factors influencing the best financing strategies for a business, such as business plans, future sales projections, and market conditions, and factors for startups and expanding businesses. Many of the tables compare advantages and disadvantages, and provide examples.