Business ownership and sources of finance

Need to know

What you need to know

• Main sources: Owner's savings, retained profit, bank loans, trade credit.
• Unlimited liability increases personal risk and makes banks cautious about lending large sums.
• The amount of finance available is directly tied to the owner's personal wealth and credit score.
• Growth can be slow as it relies heavily on reinvesting profits, which may be small.

Explanation

Business ownership and sources of finance

1. Main sources: Owner's savings, retained profit, bank loans, trade credit.
2. Unlimited liability increases personal risk and makes banks cautious about lending large sums.
3. The amount of finance available is directly tied to the owner's personal wealth and credit score.
4. Growth can be slow as it relies heavily on reinvesting profits, which may be small.