Sources of financing

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Sources of financing by Mind Map: Sources of financing

1. Internal sources

1.1. Personal funds

1.1.1. Sole traders

1.1.2. Cheap, no interest

1.2. Risk managing money

1.3. Retained profit

1.3.1. Remain after paying taxes

1.3.2. May be reinvested

1.3.3. Cheap, no interests

1.3.4. Not for start ups

1.4. Asesta Sales

1.4.1. Any source owned sold

1.4.2. Can be tangible/ intangible

1.4.3. Good raising cash , no interests

1.4.4. Takes time, may adopt sale and lease back

2. External

2.1. Share Capital

2.1.1. Money raised from sales or shares

2.1.2. Shareholders buy sold in stock exchange

2.1.3. Permanent, no interests

2.1.4. Shareholder accept dividends

2.2. Loan capital

2.2.1. Money from institutions, interest charged

2.2.2. Accessible, specific full control

2.2.3. Terms burden

2.3. Overdraft

2.3.1. Other firm to give you more money

2.3.2. Opportunity to spent more

2.3.3. Interest rates

2.4. Trade Credit

2.4.1. Agreement that allow buyer to pay at later date

2.4.2. Cash flow

2.4.3. Debtors lose discounts

2.5. Grants

2.5.1. Funds by the gov, foundations and agencies

2.5.2. Plan, proposal

2.5.3. No pay back

2.5.4. Strings attached

2.6. Subsidies

2.6.1. Assistance from the gov to support businesses in public interests

2.6.2. Help increase demand, lower prices no repay

2.6.3. Political interference

2.7. Debt factoring

2.7.1. Business sells invoice to a third party

2.7.2. Business get immediate cash (80-90%)

2.7.3. Lose a % of profits

2.8. Leasing

2.8.1. Contract to acquire assets as machinery, equipment, property

2.8.2. No high capital

2.8.3. Can be expensive, more than a direct purchase

2.9. Venture capital

2.9.1. Financial capital to high risk potential start up firms

2.9.2. Provide funding, guidance

2.9.3. High profit targets invested

2.10. Business Angels (investors)

2.10.1. Individuals provide financial capital to sample businesses in return of ownership equity

2.10.2. Favorable financial term, good financial capital

2.10.3. Ownership, control