Internal Sources Of Finance Essay

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Internal and External Sources Of Finance Callum Davies Yr 12 There are various different types of internal and external sources of finance that a company may use. 1.Share Issues, Share issues are an internal source of finance for a business to use, it revolves around selling percentages of your business on the stock market. A company such as Legends Ltd would benefit from a source of finance like this as it advertises the business, you often make the money you need in a short space of time and you receive support from investors. Advantages Disadvantages •You can attract new investors to your business. •Shared Risk-if the business you own fails, you don’t have to pay back the bank as much money as you can sell your shares,…show more content…
Advantages Disadvantages •interest fees vary depending on which bank you choose or how much you want to take out. •the bank may not give you the whole sum of money the business owner wants to take out, they may give 70-80% but this still makes it difficult fr the business owner as they may need more than what the bank has supplied. •you may have a very lengthy application in which you may fall behind on payments your business cannot already afford. •you lose control of what you can and cannot do while on the property as you no longer own it. •you’re giving up a company equity which contributes to the value of the company. 4. Venture Capital, this is an external source of finance in which a company may look for an investor to invest large sums of money in exchange for a large portion of the company. This would benefit Legends Ltd as it would allow them to seek advice from their investor and it would help them expand into new fields or to establish themselves further in their current field. Advantages
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