Own and external capital
Own capital is any own money or assets of monetary value invested in the business by the entrepreneur. External capital is usually a loan.
Money invested in the own business by the entrepreneur is own capital. However, the investment does not have to consist of money only, it can also be machinery or equipment. Invested machinery and equipment are called assets. Assets can also be any property that is of economic value to the business. An undertaking to perform work, however, is not an asset.
When starting a business, usually costs incur before any revenue. Therefore starting capital should consist of money as well to be able to cover possible costs. Starting a business with assets only can be very challenging.
Commercial banks as well as Finnvera (link opens in new tab), a specialised financing company owned by the State of Finland, grant loan financing. Different kind of leasing possibilities, credit accounts and credit cards may be of financial assistance as well.
Investors are separate investment companies or business angels that invest money in the company in return for shares.
Friends and family – actually anyone or any company/community – can invest into a business. Money can be given as a loan or in return for shares (public limited company).
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