Sources of Finance

4664 Words Aug 3rd, 2011 19 Pages
Section 1 – Sources of Finance

There are 4 main types of business ownership:

• Sole trader • Partnership • Private limited company (Ltd) • Public limited company (Plc)

Each of these types of business needs to raise finance for capital investment

Sole Trader
This is a business that is owned by one person. Sole Traders are responsible for raising all the finance to set up and run the business. Usually a sole trader would be for a small business/ (businesses with a flat organisational structure). A Sole Trader can be held responsible for all the debts of the firm. Most owners like to feel in control of their own business, so this may lead to many small businesses to stay as Sole Traders, even though this will
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A fixed asset is anything that is not used in the production of goods or services; this includes things such as buildings, fixtures and fittings, machinery. When a business desperately needs money, it can decide to stop offering certain products or services and because of that it could start selling its fixed assets.

|Advantage |Disadvantage |
|The assets are ready to be sold |You are going to reduced the amount of assets the business has |
| |got |

Mortgage – A mortgage is a form of a long term loan, though it will tend to be on property or some other fixed asset. This is also known as a secured loan, this means that the loan is secured to the asset it was borrowed for. If lets say the person who has lent the money from the lender, then the lender can take legal proceedings to repossess the asset. There are two types of major mortgages which are; • Repayment mortgages • Interest only mortgages

|Advantages |Disadvantages |
|You

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