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finance for soletrader and partnership

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Introduction

Pass 1 Finance for sole trader and partnerships The sources of finance available to sole traders and partnerships are limited. The finance listed below is the finance available to sole traders, partnerships, public limited company and private limited company. The finance below is the finance available to sole trader and partnerships. Loans - different types of loans are available to small businesses they are limited from �1000 to about �25,000 depending on where the loan is taken from. The loan is quick and easy to arrange with fixed monthly payments with interest. Most small businesses get a loan for investment or maybe expanding and then try to pay back the loan back as soon as possible with there less interest rate. This can be paid back from 12 months to up to 10 years. There are options to protect the loan with illness, sickness and accidents. Grants -What is the money given to a business from the government to help it succeed but not everyone is entitled to this. The money that is given does not have to be given back. Mortgage - This is a loan you take out to buy property. Most banks and building socialites offer mortgages, as well as specialist's mortgage lending companies. ...read more.

Middle

Shareholders choose who runs the company and are involved in making key decisions such as if the business should be sold. Debentures - this is a long term loan and does not have to be paid off until the agreed date within the contract and also only some companies are available to get this loan as it is restricted due to the loan not being paid back. The monthly interest rate is also fixed. Venture capitals - mostly commonly referred to as a type of investment in which individual investor or group of investors usually assists in the further expansion of a rapidly growing company or a commercial organisation that will require a lot of capital to get going which is known as a start up company or with a strong business plan. The venture capital is known as risk capital. Debt factoring - provides a fast repayment for when a business owes someone else money. It allows at a cost to flexibility increase your working capital and improves cash flow. Debt factoring is offered to businesses trading with other businesses on credit terms. It is not normally available to retailers or to cash traders. Most factors make payments within 24 hours and most factors require three months notice to end the service. ...read more.

Conclusion

Hire purchase Advantages - you get the item and pay nothing, pay easy payable monthly instalments. Disadvantages - very high interest rate, have to pay a balloon sum at the end of the agreement. Leasing Advantages - offers fixed rates, pay the same rate each and every month, less upfront cash, you lease and only pay the amount the time you use the item, can in most cases buy the equipment at the end of the lease. Disadvantages - you never own the product until the full amount is paid, Capital expenditure Advantage - you don't own the items so if they go wrong you don't have to fix them Disadvantages - you never own the product Preference shares Advantages - you can end up spending a lot on products Disadvantages - it can be distinguished between the maintenance Debentures Advantages - don't have to be paid back until agreed date Disadvantages - loan is restricted due to loan not being paid back Venture capital Advantages - others invest in the business Disadvantages - venture capital known as a risk Debt factoring Advantages - fast payments against sales ledger Disadvantages - not normally available to retailers or cash traders Ordinary shares Advantages - have votes on the shares within the company. ...read more.

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