9609 · 5.2.1
Business ownership and sources of finance
**Business ownership and finance** (5.2.1) connects **1.2.2 business ownership** to **5.2.2 sources**. Case questions often describe a **sole trader wanting to expand** — you must explain why **incorporation** or **PLC status** opens new finance routes.
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
- 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.