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Tuesday, 10 May 2016

External Finance

Sources of External Finance:




1. Family and friends.



Advantages / Disadvantages of using family and friends. Details here.

2. Banks

Advantages / Disadvantages of using a bank loan. Details here.

3. Peer-to-peer lending (P2PL)

The practice of lending money to individuals or businesses through online services that match lenders with borrowers. 

The lender's investment is not normally protected by any government guarantee.
Advantages / Disadvantages of Peer to Peer lending. Details here.


4. Business Angels
Individuals who use their personal wealth to provide capital to start-up early-stage businesses in return for a share of the company’s equity.
They tend to be entrepreneurial by nature and are prepared to take a high personal risk.
Click on the picture:

They hope that in due course they will be able to secure a profitable exit and see a return on their investment.
As well as capital, business angels may also bring valuable business and professional experience. 


Advantages / Disadvantages of Business Angels. Details here.

5. Crowd funding

The practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the Internet.


Types of crowd funding. Details here.


Advantages / Disadvantages of crowd funding. Details here.

6. Other businesses (Joint venture)

A commercial enterprise undertaken jointly by two or more parties which otherwise retain their distinct identities.

Advantages /Disadvantages of joint ventures. Details here.