3.1 sources of finance

2. Issue (Also known as share replacement) exists when an existing public limited company raises further finance by selling more of its shares
4. profit The value of surplus that the business keeps to use within the business after paying corporate taxes on its profits to the government and dividends to its shareholders
7. Allow a business to spend in excess of the amount in its bank account, up to a predetermined limit.
9. Source of finance Finance obtained from a third party in exchange for interest.
10. Funded by the government to lower a firm’s production costs as output provides extended benefits to society.
14. Government financial gifts to support business activities.
15. A form of debt where a contract is agreed between a leasing company (the lessor) and the customer (the lessee).

1. Capital A high risk capital invested by venture capital firms, usually at the start of a business idea.
3. funds This is a key source of finance for sole traders and comes mostly from their own personal savings
5. Capital Medium to long term sources of interest bearing finance obtained from commercial lenders.
6. Factoring A financial service whereby a factor (such as a bank) collects debts on behalf of other businesses in return for a fee.
8. The general term used to refer to where or how businesses obtain their funds
10. and leaseback A source of external finance involving a business selling a fixed asset (such as its computer systems or a building) but immediately leasing the asset back.
11. angels Wealthy entrepreneurs who risk their own money by investing in small to medium sized businesses that have high growth potential.
12. sources of finance Obtaining funds from within the organization through personal funds, retained profits and/or the sale of assets
13. Credit Allows a business to buy now, pay later.
16. Refers to a business converting its legal status to a public limited company by floating (selling) its shares on a stock exchange for the first time.