A grant is a sum of money that is given out by the government or the European Union to people who want to start or expand a business. This money does not have to be repaid. For example, in 2014 Enterprise Ireland provided €219 million in funding for enterprise development.
Businesses may have to meet certain criteria in order to receive a grant (e.g. create a number of jobs). The Local Enterprise Office (LEO) provides grants to local businesses with viable business ideas.
Ordinary Share Capital
Ordinary share capital is finance raised by selling shares in the company. The money raised by selling shares does not have to be paid back. However, shareholders will receive a percentage of the profits each year (a dividend).
Every share is one vote, so by selling shares a business will lose some control. To maintain control, a business will need to keep at least 51% of the shares.
Find out the current share price of a business of your choice that is listed on the Irish Stock Exchange (ise.ie). Record it in the Economy Watch section of your Activities and Accounts Book and monitor it.
Long-term Loan
This a loan taken out over a period of five years or more (e.g. a mortgage). It is paid back in instalments, plus interest. Repayments can be structured to suit the needs of the business.
Sale and Leaseback
Sale and leaseback involves selling a valuable business asset, such as land or buildings, to raise money. The asset is sold to an investment company and leased back over a period of time. Money that is tied up in the asset is released and used to finance the business.
The business is still able to get full use of the asset in question. However, the business no longer owns the asset. The new owners of the asset may increase the rent on the asset over time.
Sources of finance A
Go to page 124 of your Activities and Accounts Book to categorise the different sources of finance available to a business.
