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Chapter 6

Other sources of finance

3.1 Overview of sources of long term finance

As well as the standard equity and debt sources of finance, also
consider:

 existing cash resources – N.B. This is NOT the same as retained
earnings

 sale and leaseback – Funds are released without any loss of use
of assets, but any potential capital gain on assets is forgone

 grants – Key advantage – they do not need to be paid back

 warrants – Often issued with a bond as a sweetener to encourage
investors to purchase the bonds

 convertible bonds – Give the debt holder a potential capital gain
over and above the return from the debt interest

 venture capital/business angels – Business angels are similar to
venture capitalists. Venture capitalists are rarely interested in
investing in very small businesses, on the grounds that monitoring
progress is uneconomic

 government assistance – For example, for entities wanting to
expand or relocate in particular regions, to promote innovation and
technology, to create new jobs

 leasing

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