Sources of finance for different forms of business organisation and associated risks: owner's capital, partners' capital, bank overdraft, bank loan, mortgage, ordinary shares, debentures
Businesses raise money in different ways depending on their legal structure. A sole trader uses their own savings, while a public limited company can sell shares or issue debentures to thousands of investors.
Real World
When Brewdog raised £25 million through crowdfunding ordinary shares in 2020, it used a source unavailable to sole traders or partnerships — showing how business structure dictates finance options.
Exam Focus
Match the source of finance to the correct business type first, then evaluate risk — mismatching (e.g. shares for a sole trader) scores zero.
Essay Framework
Use PEEL to structure every paragraph. Tap each step for guidance and an example.
How well did you know this?