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Availability of Finance

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Introduction

Task 11- Availability of Finance There are three main types of financing: Short, Medium and long term Short Selling Assets: The business can sell factory or office areas and space that is not in use. Factoring: The factor is a organisation which will collects debts of other businesses quicker and more efficiently. Retained Profits: This is the part of the profit made that is left and is not distributed amongst owners instead it is retained to perhaps put back into the business. Grants: Government gives money to the business. Medium Bank loans: The borrowing of money from a bank however this has to be paid back including interest within a set period of time Trade credit: Businesses are able to spend money to purchase goods and services on credit. ...read more.

Middle

This money is used to enhance their employment rate and to develop the less wealthy areas of the country. Long Preference shares: In a limited company the shareholders receive a fixed amount of divided each year. When dividends are paid the preference shareholders seize precedence over normal shareholders. Ordinary shares: In a limited company the shareholders receive dividends each year dependant on the sum of profit. Venture capital: A financial institution: borrows money to businesses considering expansion rather than for new inventions or production. Mortgage: A long loan secured upon property. If the borrowers do not keep up with the payments then the property can be repossessed. Debentures: A long term loan to a business between 5-25 years. Finance availability for my Business The financial scheme that is be most suitable for my business will be by obtaining a bank overdraft. ...read more.

Conclusion

The actual area that I wish to rent will need a new design to make it viable and exciting to customers. My business will be new therefore my budget is not as large as other companies. I can apply for a grant from the government to start me off and keep the business alive. This will allow me to raise capital from sales to repay this type of finance. A bank loan will try and be avoided as it has many disadvantages to it. However it will allow me to pay off debts easily yet repayments need to be paid on a monthly basis including interest that makes it more costly depending on the income and the amount of the loan taken. This is problematic as attention will be needed to monitor the interest rates in order to be paying the less possible amount of money. Profits will be tried to kept at the highest possible level. ...read more.

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