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5.1. Business finance

Syllabus
0264–2027–2028
Topic
5.1
Level
—

5.1.1—The need for business finance

  • the main reasons why businesses need finance: start-up capital, capital for expansion/growth, replacing existing non-current assets, investing in new technology, working capital
  • short-term and long-term finance needs of a business
  • concept and importance of working capital

5.1.2—The main sources of finance

  • internal sources of finance: owners’ investment, retained profit, sale of unwanted assets, working capital
  • external sources of finance: share capital or issuing shares, venture capital, bank overdrafts, leasing, hire purchase, bank loans, trade credit, government grants, crowdfunding
  • advantages and disadvantages of internal and external sources of finance
  • the main factors to consider when selecting a source of finance: size of business, legal form of business, amount required, length of time, existing loans, cost, purpose
  • recommend and justify an appropriate source of finance for a given situation

Objective notes

2 learning objectives
ConceptIGCSE Business Studies