26D internal and external

Internal sources of finance are ones which come from owners of the business.
EX:Owner’s personal funds

income from a sale of the company assets

AD:
No cost to using this money
Doesn`t worry about the money being withdrawn.
No risk of interference in decision making by a lender
Doesn`t have to pay anything from profit which they don`t want to pay
Borrowing from friends or family rarely means interest has to be paid
Friends and family may be more willing to lend

DA:
Have limited finance to start, limited which business can purchase
New business has risk. Entrepreneur could lose everything
If business doesn`t run well, may have argument

External sources of finance are ones which come from outside of the business

EX:overdraft
loan
share capital



overdraft:

AD:

1. it`s flexible source of finance,you can use when it is needed


2. quick and easy to arrange

DA:

1. expensive if used for a long term or large amount
2. business has to have bank account

loan:

AD:

1. interest is fixed for the period of the loan
2. loan is guaranteed for the period
3. don`t need to give the lender a proportion of the profits earned by the business

DA:

1. interest is paid whether company earn
2. business is paying for something it no long needed