Answered: outside party

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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How funding a business from an outside party?

Expert Solution

Step 1: Definition

Funding: Funding is a concept of collecting funds or financing programs or projects. An organization put efforts to evaluate the needs of finance and based on this the sources of fund are selected to raise money.

Step 2: External Sources of Funds

The business firms can do funding from outside parties and external sources are:

Business owners can borrow money from their friends and family.
Business firms take a loan from the banks and run their business activities.
The venture capitalists and business angels are also the outside parties who can give a high amount of funds to a borrowing business unit. The venture capitalists are the private equity investors that give capital to a business firm and want to see high growth in a firm for the exchange of equity. The business angels are individuals who invest their money in the starting stage of start-up and in return, they get capital participation.

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