SOURCES OF EXTERNAL FINANCE - Banks

Banks - Financial institutions that are licenced to the deposits, pay interests,  make loans and act as an intermediary in financial transactions, as well as provide other financial services to their customers.

Banks will have departments and employees who specialise in business banking including offering advice on topics such as methods of Finance and business planning.

ADVANTAGES

• Fixed sum available via loans
• Easy to plan for fixed repayments

DISADVANTAGES

• Often difficult to persuade banks to lend
• May not be flexible
• Requires interest payments
• May require collateral

BEST FOR... Established businesses with a credit record.Overdrafts for short term cash flow problems.