Investment Vocabulary - BE 4 Unit 9 : Raising Finance

There is no point in pumping money into dying industries. We need entrepreneurs who  will start new businesses.

After he was made redundant, he and his family had to relocate to Austria in order to find work.

I have listened to your pitch and I am interested in investing in your product.

The government is starting a scheme for recycling old analogue radios.

Trade fairs are great opportunities for networking with colleagues and examining competitors’ products.

Fortunately my family gave some backing during my engineering course at university.

The bank refused to give me a loan because they said I didn’t have a clear business plan.

If you put all your eggs in one basket, you couldn’t put your market share at risk.

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When a company is growing rapidly, it is rarely able to finance expansion from cash flow alone. Therefore, it needs to raise finance from external resources.

When looking at resources of new business finance, it is really important to strike a balance between equity and debt.

What are the key differences between the two?

With debt, the bank giving the loan requires interest payment and capital repayments; and the assets of the shareholders and directors can be at risk if these are not met.

The bank can put the business into administration or bankruptcy if defaults on the loan or if business is not going well.

With equity, the institution lending the money has a stake in the business and therefore, a greater incentive to see the business succeed, as it takes the risk of failure along with all the other shareholders.

On the other hand, if the company is successful, equity investors benefit and make profits on the eventual sale of their equity stake.

Customers not paying on time often leads to cash flow problems.

Our state-of-the art machinery is our major asset.

The interest rate on the loan was 12%.

They could not pay their debts and faced bankruptcy.

X has gone into  ...adminstration    with debts of about $20m.

The finance a company rises from issuing shares rather than taking out loans is known as equity capital.

The principal is the original amount of a loan not including any interest charged.

A mortgage is a particular type of loan for the purchase of property.

If a company defaults on a loan, it means they miss a collateral.

Money lent to start-up business is known as risk or venture capital.


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Being in the black means you are in credit.

A grant is money which  doesn't need to be repaid.

A debtor owes money.

A dividend payment is part of a profit paid to shareholders.

Liabilities are the total amounts of money owed by a business.

A return is the amount of profit made on an investment.

To go into liquidation is when a company stops operating because of financial difficulties.

A collateral is security for a loan in the form of assets which could be sold if the debt is unpaid.


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Leasing machinery, vehicles, etc makes more financial sense than buying them.

There should be more controls on access to credit.

Expanding fast means going into debt.

Declaring bankruptcy is a useful tool for clearing debts and starting again.

It is good practice to pay suppliers as late as possible and maximize any credit terms.

A successful business shouldn't need to raise a lot of finance.