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Chapter 19
Business Finance
| Term | Definition |
|---|---|
| Trade Creditors | A person/firm to whom a business owes money. |
| Bank Overdraft | The business has a permission from their bank to overdraw their current account. |
| Expenses Due | The business delays paying their business expenses for as long as possible. |
| Term Loan | A loan from a bank or other financial institution that is repaid over a period of between 1 and 5 years. |
| Leasing | The firm enters into an agreement with a finance comapny to pay them an agreed amount of money each month in return for the use of the asset. |
| Hire Purchase | The deal involves 3 parties - the buyer, the seller and a finance company. The finance company pays the seller in full for the asset and then collects the money in instalments from the buyer over an agreed period of time. |
| Ordinary Shares | This is where the company sells shares in the business to raise money. |
| Retained Earnings | In limited company, the profits can either be paid to the owners or kept in the business. The profits that are kept in the business are known as retained earnings. |
| Sale and Leaseback | Firms can sell the asset to an investment company for its market value and then lease it back over a period of time at an annual rent. |
| Grants | Non-repayable sources of finance available from the government and the EU to help people who wish to start a new business. |
Created by:
jdunnestmarks
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