Surveys (for example, Real World11.13) show that many small businesses use credit cards to help finance their
Question:
Surveys (for example, Real World11.13) show that many small businesses use credit cards to help finance their activities. Why might they do this?
Data from Real world 11.13
Small business funding
The most important source of external finance, in terms of the number of small businesses that use it, is that which is provided by financing institutions (banks and credit card businesses), as the bar chart in Figure11.13 shows.
Figure 11.13
Leasing and HP finance is also a major source. It is striking what a large proportion of small businesses drew on credit card funding (36 per cent). Presumably, this is used mainly to finance working capital and the debt is paid off before interest becomes payable.
Although venture capital is undoubtedly an important source of finance for some businesses, overall it is relatively insignificant.
Note that the bars in Figure11.13 represent the percentage of businesses that are financed partly by that source. The percentages do not represent the proportion of each source of finance that make up the total funding of the typical small business at the survey date.
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Accounting And Finance For Non Specialists
ISBN: 9781292334691
12th Edition
Authors: Peter Atrill, Eddie McLaney