Availability of Finance

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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. By doing this  the payment is delayed between 1-3 months.

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Leasing:

The renting of perhaps: equipments, machinery and premises. Leasing is paid by parts(instalments) over a period of time normally within 1-3 years.

Sale and lease back:

In this case the business sells one of its main buildings to a financial institution and then leases it back from them by paying a rent.

Businesses sell one of their main buildings to a financial association. Thereafter it is leased back from them by paying rent.

Hire purchase:

The renting of: equipment before buying. This means the borrower does not own the affect until the final instalments have been successfully ...

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