Summary Business Finance: needs and sources

Business Finance: n
Why businesses need finance
To set up the business (start-up capital)
To pay day-to-day expenses, such as wa
capital)
To purchase buildings and other non-cu
To invest in the latest technology (capita
To finance business expansion
To finance research into new products/n

Short-term and Long-term finance

Long-term finance is when a business needs
invested over several years. Short-term fina
amount of money over a short period of tim

Main sources of finance
*Not every source of finance can be used for

, Sale of non-current assets

A business can raise finance through:
the sale of unwanted non-current assets
Benefits: no direct cost to the business
Machinery might not raise as much mon
because its much more specialised.

the sale and leaseback of non-current a
by the business and then renting them b
Benefits: no direct cost and can raise ver
Limitations: future costs will increase as
leasing charged to the new owner; leasin
the lease is renewed; when the leasing ag
may have to find new premises if the new
buildings for another purpose.

Use of working capital

A business can raise finance from:
cash balances