ECON 1 Lecture Notes - Lecture 20: Hire Purchase, Share Capital, Main Source
Document Summary
Selecting the right sort of f inance: the more fixed assets are needed, the higher the stock-holding, and the longer debtors take to pay, the greater the need for finance. Lease this allows the firm to use the asset without owning it by making regular lease payments. Interest is paid on the cash advanced, until the invoice is paid: start-ups should also consider whether grants or soft loans are available to them. Loan finance: banks: main source of finance to small firms, but banks can be reluctant to lend to small firms and new ventures. Agency theory and information asymmetry: the providers of finance often have little information on which to base the financing decision, thus asymmetric information favors the entrepreneur. Studies cannot uncover any systematic discrimination on grounds of ethnicity and gender. Business angels private individuals that invest equity in a business.
