Additional Sources of Finance and Their Implications
This page delves deeper into alternative financing methods and their specific advantages and disadvantages for businesses.
Grants are a unique form of financing, typically awarded by government bodies or charitable organizations, often with specific criteria or conditions attached.
Highlight: Grants do not need to be repaid, making them an attractive option for businesses meeting specific criteria or operating in targeted sectors.
Debt factoring is a short-term financing solution where businesses sell their invoices to a third party to improve cash flow.
Example: A company might use debt factoring to receive immediate payment on invoices, rather than waiting for the standard 28-day payment terms.
Sale of assets is another method businesses can use to raise funds quickly by selling items they no longer need, such as machinery or vehicles.
Vocabulary: Venture capital refers to money provided by investors to startups or expanding companies, often in exchange for equity and typically used for higher-risk investments.
Quote: "Venture capitalists may want a share of the business, meaning some control may be lost."
This page emphasizes the importance of understanding the long-term implications of each financing method on business control, profitability, and growth potential.
