Evaluation
Edexcel A-Level Business 9BS0
Meeting Customer Needs
Marketing Mix and Strategy
Managing People
Entrepreneurs and Leaders
Financial Planning
Managing Finance
Resource Management
External Influences
Business Objectives and Strategy
Decision-Making Techniques
Influences on Business Decisions
Assessing Competitiveness
Globalisation
Global Markets and Business Expansion
Global Marketing
Global Industries and Companies
Raising Finance
- 4 subtopics
- 18 things to know
- Paper 2 and Paper 3
What Raising Finance covers
Raising finance opens Theme 2 and is examined on Paper 2. It covers the money a business can find inside itself, the sources and methods open to it outside, what liability means for the people who own it, and the business plan and cash-flow forecast that persuade anyone to hand money over.
Where it is assessed
Paper 2 and Paper 3
Theme 2, examined on Business activities, decisions and strategy, then the pre-released synoptic paper.
Check the Pearson Edexcel specification ↗The 4 subtopics
Each one has its own page.
- Internal financeOwner's capital, retained profit and the sale of assets, with the case for and against each as a way of funding a business.Open →
- External financeFamily and friends, banks, peer-to-peer lending, business angels, crowdfunding and other businesses, and loans, share capital, venture capital, overdrafts, leasing, trade credit and grants.Open →
- LiabilityUnlimited and limited liability, what each means for an owner's personal assets, and how liability shapes the finance a business can raise.Open →
- PlanningWhat a business plan contains and who reads it, and the cash inflows, outflows and closing balances that make up a cash-flow forecast.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Evaluation
Evaluate retained profit as a source of finance.
Evaluation
What are the risks of selling assets to raise finance?
Key term
What costs does a business avoid by using internal finance rather than external borrowing?
Key term
Define crowdfunding, a loan, and business-to-business finance.
Key term
Define an overdraft, venture capital and leasing.
Key term
Distinguish sources of finance from methods of finance, and give an advantage and a disadvantage of a loan.
Numbers
Why might a bank withdraw an overdraft facility, and what impact could this have on a business?
Key term
Distinguish unlimited from limited liability.
Evaluation
How does limited liability affect how a business raises finance?
Key term
Name two short-term finance options available to both limited and unlimited liability businesses.
Key term
What goes into a cash-flow forecast, and who reads it?
Numbers
Define each term in the closing balance formula.
Numbers
How is a closing balance calculated, and what delays it?
Process
How can managers use cash-flow forecasts for monitoring business performance?
Process
What key aspect of business performance does a cash-flow forecast fail to show?
Numbers
State the net-cash-flow formula.
Numbers
State the cash-flow closing-balance formula.
Take Raising Finance further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Share capital vs Loan capital
Share capital: money raised by selling ownership stakes in the business. Loan capital: money borrowed that must be repaid with interest.
Overdraft vs Bank loan
Overdraft: a facility to draw an account below zero up to an agreed limit. Bank loan: a fixed sum advanced for a set period and repaid on a schedule.
Venture capital vs Crowdfunding
Venture capital: investment in a high-risk business in exchange for an equity stake. Crowdfunding: raising small amounts from a large number of people, often online.
Questions from this topic
Each one with the model answer underneath.
- 1
What is meant by owner's capital as a source of business finance?
Model answer
Personal savings invested directly into the business by the owner to provide funding.
- 2
Does using personal savings to fund a business incur interest charges?
Model answer
No, personal savings do not incur interest charges or require repayment to external parties.
- 3
Why might an entrepreneur prefer using personal savings over a bank loan when starting a business?
Model answer
Personal savings avoid interest charges, repayment obligations, and do not require external approval.
- 4
Why might personal savings be an inadequate source of finance for a growing business?
Model answer
Personal savings may be limited in amount, restricting the scale of business activity that can be funded.
- 5
What financial risk does an owner face when using personal savings to fund their business?
Model answer
The owner bears the full financial risk if the business fails, potentially losing their entire investment.
- 6
Define retained profit.
Model answer
The portion of net profit that a business keeps rather than distributing to owners.
What is inside Levo
Six ways to work the same material.
Raising Finance revision questions
- What does Raising Finance cover in Edexcel A-Level Business?
- 4 subtopics: internal finance, external finance, liability and planning. Each one has its own page with questions and model answers.
- How is Raising Finance organised?
- By the Edexcel 9BS0 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Raising Finance, on a schedule.
Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.
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