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Finance. Sources of finance
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Word study
Упражнение №1. Изучите определения новых слов.
| Asset | Any item owned by a business. |
| Bank loan | A sum of money provided to a business by a bank for a specific agreed purpose. |
| Business Angels | Are business individuals who invest in new businesses looking for a higher return. Will also offer expertise, experience and contracts. |
| Fund raising | Groups or individuals can raise funds by organising events and activities. |
| Gifts from friends and relatives | Involves no repayment and no interest. |
| Mortgage | Large loans, normally given for the purchase of property. A typical mortgage will last 25 years and it is always secured on the property that is purchased. |
| Ordinary share capital | Money given to a company in return for a share certificate which gives part ownership of the firm. |
| Overdraft | Where a bank allows a business to overspend its current account up to an agreed limit. |
| Own personal savings | Sole trader will use some of their own money to start the business. |
| Retained profit | That part of a business’s profit that is reinvested in the business. |
| Venture capital | Investments from groups of investors who specializes in supporting new ventures that may be considered risky by traditional lenders such as banks. |
Speaking
Упражнение №2. Ответьте на вопросы:
e.g.: What do we mean by Sources of Finance? – Sources of finances mean where businesses or individuals get money from, for example, loans, overdraft, credit cards.
1. Why do businesses need finance?
Starting up; pay Bills; pay wages; expand; takeover
2. What sources of finance are available?
Internal, external, short-term, medium-term, long-term
Word study
Упражнение №3. Изучите определения.
| Internal sources of finance External sources of finance Short-term Finance Medium-term Finance Long-term Finance | Finance which is raised internally. It does not increase the debts of the business e.g.: retained profit, own personal savings, sale of unwanted assets Finance provided by people or institutions outside the business, creates a debt that will require payment e.g.: bank loans, overdraft, venture capital, mortgage Finance provided for 0 – 3 years Finance provided for 3 – 10 years Finance provided for the period of over 10 years |
Reading
Упражнение №4. Прочитайте и переведите текст “Loans”. Текст №1
Loans
You probably would take one of these out from the bank. It could be a mortgage for as long as 20 years. It could be a financial product over a shorter period such as one to two years. This could be classed as a long or medium term source of financing depending on how long it is taken for.
Advantages: Interest rates are likely to be lower than those of shorter term sources of finance such as overdrafts. Interest charges can be fixed over the term of
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the loan, this means that monthly payments will always be the same and can be planned for.
Disadvantages: Repayments must be made on time every month or the business could be taken to court. The bank is likely to secure this type of finance against the assets of the business such as machinery. If the payments are missed the business could be forced to hand over these assets.
Word study
Упражнение №5. Изучите новые слова.
1. mortgage закладная, кредит под недвижимость, ипотека
2. medium term среднесрочный
3. interest rates размер процентной ставки
4. repayment погашение задолженности
5. to secure предоставлять обеспечение, обеспечивать долг
Упражнение №6. Переведите на русский язык:
Source of financing, fixed, monthly payment, assets, machinery, to be forced to, to hand over.
Упражнение №7. Прочитайте и переведите текст “Personal Savings”. Текст №2
Personal Savings
Many people start up their businesses using this long term source of finance. An example of this source of finance would be if a person was made redundant from their job and received a redundancy payment. They could choose to save this money or invest it into their business idea. In practice most start-ups are financed using this source for at least some of the required finance.
Advantages: It is a big risk to take. If the business fails then you will lose the money that you have invested.
Disadvantages: If the business idea is a success you will not have to share the profits with anyone else. There will also be no loan repayments to worry about.
Упражнение №8. Изучите новые слова.
1. long term долгосрочный
2. to make redundant уволить в связи с сокращением штата
3. redundancy payment выходное пособие в связи с сокращением
4. start-up стартап-компания, начинающая компания
5. to fail потерпеть неудачу
Упражнение №9. Ответьте на вопросы:
1. How do people usually start their business?
2. What people can do with redundancy payment?
3. Is it a big risk to use personal savings for starting a business?
4. How most start-ups are financed?
5. What will happen if your business fails?
Упражнение №10. Прочитайте и переведите текст “Profit”. Текст №3
Profit
This type of business finance takes the money already made by a business and reinvests it in the business. This long term source of finance is the used by over 60% of businesses.
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Advantages: No interest needs to be paid and no shares in your business have to be sold.
Disadvantages: Any money re-invested in the business cannot be taken out of the business by the owners as a financial reward.
Упражнение №11. Изучите новые слова.
1. to reinvest вновь вкладывать (капитал); реинвестировать
2. share доля, акция
3. owner собственник
4. financial reward финансовое вознаграждение
Упражнение №12. Прочитайте и переведите текст “Venture Capital”. Текст №4
Venture Capital
This is a combination of share and loan capital. Providers of venture capital (such as the EBRD venture funds) will take risks as long as they can share in the rewards. Therefore they want a share stake in the business. This is a long term source of finance.
Advantages: For a young growing firm, this type of finance is more likely to be obtained than a bank loan.
Disadvantages: To obtain this type of finance you may need to be willing to part with a larger slice of your business than you would like to.
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