Key term | Definition |
Business angels | Wealthy and successful private individuals who risk their own money in a business venture that has high growth potential. |
Crowdfunding | Rising finance for a business venture or project by getting small amounts of money from a large number of people, usually through online platforms. |
External sources of finance | Finance that comes from outside the organization, usually with the help of a third-party provider, such as a bank, business angel, venture capitalist or government. |
Initial public offering (IPO) | Finance raised by a public limited company when it issues (sells) shares for the very first time on a stock exchange. |
Internal sources of finance | Finance that come from within the organization, from its own resources and assets without the help of a third-party provider. |
Leasing | This financial service enables businesses to have access to fixed assets, by hiring these assets, but without the high costs of capital expenditure. |
Loan capital | Also known as debt capital, this refers to borrowed funds from financial lenders, such as commercial banks. |
Long-term finance | Refers to sources of finance of more than five years, for the purchase of long-term fixed assets or to fund the growth of a business in overseas markets. |
Microfinance | An external source of finance provided by financier who support entrepreneurs of small businesses, especially females and those on low incomes who are ordinarily unable to secure loans from commercial banks. |
Microfinance providers | Refers to the financiers or organizations that lend small amounts of money to entrepreneurs of small businesses, especially females and business owners on very low incomes. |
Overdraft | A banking service that enables customers (personal and business customers) to withdraw more money from their account than exists in the account. |
Personal funds | Internal source of finance, with entrepreneurs using their own savings, usually to finance their start-up business. |
Retained profit | This is the surplus funds that are reinvested back in the business, rather than being distributed to the owners. |
Revenue expenditure | Refers to business spending on its everyday and regular operations, e.g. spending on wages, raw materials and bills. |
Sale of assets | An internal source of finance that involves the firm selling existing items of value that it owns. |
Share capital | Also known as equity capital, this is finance raised through the issuing of shares via a stock exchange (or stock market). |
Share issue | The process involving a public limited company selling additional shares in order to raise finance. |
Short-term finance | Refers to sources of finance needed for the day-to-day running of the business, i.e., revenue expenditure. |
Sources of finance | Refers to where a firm obtains its money to fund its business activities and operations, such as from personal savings, loan capital, crowdfunding, and share capital. |
Stock exchange | A highly regulated marketplace where individuals and businesses can buy and sell shares in public limited companies. |
Trade credit | Financial service that enables a business customer to purchase and obtain goods and services but to pay for these at a later date. |
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