External Sources Of Finance - GCSE Business Definition

External sources of finance are funds that a business obtains from outside the organisation rather than from its own operations or profits. These sources are essential for financing business activities such as expansion, purchasing new equipment, or managing day-to-day expenses. Common external sources include bank loans, overdrafts, share capital, venture capital, and trade credit. Each source has advantages and disadvantages, such as interest rates and repayment terms, which businesses must consider carefully. Understanding external finance is crucial for students studying GCSE Business, as it helps them grasp how businesses plan and sustain their operations financially.