Business - Sources of Finance

Identify the correct source of finance from the description

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Last updated: March 17, 2016

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Hint	Answer
Selling items of value that the business no longer needs	Selling assets
A deficit in a bank account caused by drawing more money than the account holds	Overdraft
A legal agreement in which a person borrows money to buy property and pays back the money over a period of years with interest	Mortgage
When a business uses equipment but doesn't own it until the final payment has been made	Hire Purchase
Where companies are allowed to purchase raw materials but pay for them at a later date	Trade credit
Profit kept in the business after owners have taken their share of the profits	Retained profit
An amount of money which is given to the business to buy something. The money has to be paid back in full, with interest	Loan

Hint	Answer
This source of finance is only available to limited companies	Selling shares
The sale of inventories to reduce inventory levels	Running down stock
When owners of a business use their personal gains to invest into the business	Owner's savings
Support provided by a government to help a business start up	Grants
Long term loans of up to 25 years, normally provided to large companies	Debentures
When debt agencies buy the debt of the debtors and pay a percentage of the original debt immediately to the company	Factoring debt