{"id":179840,"date":"2024-11-22T14:54:07","date_gmt":"2024-11-22T14:54:07","guid":{"rendered":"http:\/\/realbusiness.co.uk\/?p=179840"},"modified":"2025-02-11T08:46:16","modified_gmt":"2025-02-11T08:46:16","slug":"external-v-internal-finance","status":"publish","type":"post","link":"https:\/\/realbusiness.co.uk\/external-v-internal-finance","title":{"rendered":"Difference Between Internal And External Financing"},"content":{"rendered":"<div class='booster-block booster-read-block'><\/div><p data-pm-slice=\"1 3 []\"><strong>Internal and external sources of finance are viable options for any business looking to source extra finance for different business activities. Money makes the world go round, as they say, and it&#8217;s no different for businesses. You might need to look for financing from external sources or internal sources for a variety of reasons, including:<\/strong><\/p>\n<ul>\n<li><strong>business operations<\/strong><\/li>\n<li><strong>expansion attempts<\/strong><\/li>\n<li><strong>recruitment drives<\/strong><\/li>\n<li><strong>new product development<\/strong><\/li>\n<li><strong>new facilities<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>You can fund these activities in one of two ways &#8211; external v internal finance. Internal financing refers to retained profits, sale of assets and funding by you as the business owner. External sources of finance include bank loans, equity investment funds and crowdfunding.<\/p>\n<p>Deciding which is right for you will depend entirely on your circumstances. To help you, though, Real Business has put together the following guide exploring the differences between external sources and internal sources of finance to help you decide what&#8217;s best for you.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_74 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-684fde58123c3\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-684fde58123c3\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#What_Is_Internal_Financing\" >What Is Internal Financing?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#Internal_Financing_Options_Pros_And_Cons\" >Internal Financing Options Pros And Cons<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#Retained_Earnings\" >Retained Earnings<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#Sale_Of_Assets\" >Sale Of Assets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#Owners_Funds\" >Owner's Funds<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#What_Is_External_Financing\" >What Is External Financing?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#External_Financing_Options_Pros_And_Cons\" >External Financing Options Pros And Cons<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#Bank_Loans\" >Bank Loans<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#Equity_Investment\" >Equity Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#Crowdfunding\" >Crowdfunding<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/realbusiness.co.uk\/external-v-internal-finance\/#Difference_Between_Internal_And_External_Financing_Summary\" >Difference Between Internal And External Financing Summary<\/a><\/li><\/ul><\/nav><\/div>\n\n<h2><span class=\"ez-toc-section\" id=\"What_Is_Internal_Financing\"><\/span>What Is Internal Financing?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Internal financing comes from funding generated from within the business. Internal cash flows and assets make all the difference here. Retained earnings, asset sales and owner funds are the main ways that you can finance your business activities.<\/p>\n<p>Most often internal sources of finance are used during the early stages of business as you&#8217;re starting out. You require less funds to operate at this time and short term internal financing offer a strong solution here before you start making more money as you grow.<\/p>\n<p>External finance examples only seem to become important after a business has already proven itself. During the early stages of a business, the application process and administration involved in external financing simply isn&#8217;t worth it.<\/p>\n<p>Internal financing is great when external finance sources are unavailable or risky \u2013 such as when the business doesn&#8217;t qualify for bank loans or has poor credit history. Business owners who don&#8217;t want to give up control of their assets or power to external financiers will also prefer this route.<\/p>\n<p>Internal financing really only faces one limit: how much spare cash is lying around from profits, assets, or your personal wealth as a business owner.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Internal_Financing_Options_Pros_And_Cons\"><\/span>Internal Financing Options Pros And Cons<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>Retained earnings<\/li>\n<li>Sale of Assets<\/li>\n<li>Owners funds<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"wp-image-194172 size-large aligncenter lazyload\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-internal-financing-1024x576.jpg\" alt=\"internal financing\" width=\"800\" height=\"450\" \/><noscript><img decoding=\"async\" class=\"wp-image-194172 size-large aligncenter lazyload\" src=\"https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-internal-financing-1024x576.jpg\" alt=\"internal financing\" width=\"800\" height=\"450\" srcset=\"https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-internal-financing-1024x576.jpg 1024w, https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-internal-financing-300x169.jpg 300w, https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-internal-financing-1536x864.jpg 1536w, https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-internal-financing-2048x1152.jpg 2048w, https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-internal-financing-scaled.jpg 1200w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/noscript><\/p>\n<h3 data-pm-slice=\"1 3 []\"><span class=\"ez-toc-section\" id=\"Retained_Earnings\"><\/span>Retained Earnings<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Retained earnings refer to the net profit available to the company that is kept in the business rather than distributed to shareholders. This pool of cash accumulates ready to be used for future capital investments and business expansions without the need to bring in external finance.<\/p>\n<p><strong>Pros<\/strong><\/p>\n<ul>\n<li><strong>Easily Accessible Capital<\/strong> \u2013 The funds are already sitting on the balance sheet ready for deployment into growth initiatives or operating needs. Avoiding pitching to lenders or investors is beneficial.<\/li>\n<li><strong>No Financing Costs<\/strong> \u2013 Unlike debt financing, retaining earnings avoids interest payments flowing out of the organisation to lenders or bondholders.<\/li>\n<li><strong>Preserves Control<\/strong> \u2013 Relying on internal equity financing rather than external equity issuances prevents ownership stake dilution and loss of decision-making autonomy.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Cons<\/strong><\/p>\n<ul>\n<li><strong>Limited Availability<\/strong> \u2013 The pool starts small for early-stage startups not yet profitable and is capped even for mature companies by annual profit levels. Large needs may exceed retained earnings.<\/li>\n<li><strong>Foregoes Other Uses<\/strong> \u2013 Retained capital cannot also be deployed in alternative ways like paying dividends, paying down debt early, or repurchasing company shares.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>Retained earnings is the optimal form of financing for businesses but it can take time to get to this stage and is fully dependent on business success.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Sale_Of_Assets\"><\/span>Sale Of Assets<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Businesses have plenty of assets that can be sold to raise cash. This could be property, equipment, inventory or anything else owned by the company that could attract a monetary value through sale. The money raised can then be reinvested into the business where it&#8217;s needed.<\/p>\n<p>Common categories of business assets that can be sold include:<\/p>\n<ul>\n<li><strong>Property<\/strong> \u2013 Land, buildings, facilities, real estate<\/li>\n<li><strong>Equipment<\/strong> \u2013 Machinery, tools, servers, hardware assets<\/li>\n<li><strong>Excess Inventory<\/strong> \u2013 Raw materials, finished goods, components<\/li>\n<li><strong>Intellectual Property<\/strong> \u2013 Patents, trademarks, licences<\/li>\n<li><strong>Business Units<\/strong> \u2013 Selling divisions, product lines, brands<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Pros<\/strong><\/p>\n<ul>\n<li><strong>Rapid Cash Influx<\/strong> \u2013 Asset sales can monetise tangible assets quicker than waiting on financing applications. Great for time-sensitive needs.<\/li>\n<li><strong>Shed Excess Capacity<\/strong> \u2013 Opportunity to sell underutilised, outdated, or obsolete holdings dragging down operations.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Cons<\/strong><\/p>\n<ul>\n<li><strong>Lost Income Potential<\/strong> \u2013 Selling cash-generating units risks losing their future revenue, cash flows, and lifespan value.<\/li>\n<li><strong>Impact On Operations<\/strong> \u2013 Even non-revenue assets like equipment often support business workflows so their sale causes disruption.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>This provides easy access to large sums of money, but selling fundamental assets can be incredibly difficult and costly to business operations. Make sure you shed non-essential assets first and be wise about what you sell.<\/p>\n<h3>Owner&#8217;s Funds<\/h3>\n<p>When a business owner injects their cash into the business, this is considered internal funding. This personal funding may come from shareholders, business owners, partners or other principal leadership members.<\/p>\n<p>Examples of owners&#8217; funding include bootstrapping from personal savings, taking on second mortgages to free up cash, putting up their assets as collateral, borrowing from friends and family and cashing in retirement savings.<\/p>\n<p><strong>Pros<\/strong><\/p>\n<ul>\n<li><strong>Full Control Retention<\/strong> \u2013 Avoiding external capital prevents diluting decision-making.<\/li>\n<li><strong>No Repayment Obligations<\/strong> \u2013 Owner funds act as permanent capital without required interest expenses etc &#8211; you can simply pay yourself back when you can.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Cons<\/strong><\/p>\n<ul>\n<li><strong>Personal Financial Risk<\/strong> \u2013 Ties the owner&#8217;s wealth and finances to the business, jeopardising their stability in cases of poor performance. Be careful if you choose to go this route.<\/li>\n<li><strong>Limited Capital<\/strong> \u2013 Completely dependent on the owner&#8217;s current wealth and access to credit and if you need a large amount of capital for the business you may be unwilling to contribute such a large amount.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>Self financing is great if you want to retain greater control, but just know that you will be tying your finances to the success of the business and you should be wary here.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Is_External_Financing\"><\/span>What Is External Financing?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Naturally, external financing is when you get money from outside sources rather than using internal options. This typically involves a bank, lending institution or investor. When a company starts to grow quickly, they&#8217;ll often need an injection of cash to keep up. It can also be the only option open to business&#8217; who are facing financial issues.<\/p>\n<p>Often external sources of finance are required when larger amounts of cash are necessary for the business &#8211; usually more than is available internally. If used in conjunction with wise business decision making, external financing can be a great option.<\/p>\n<p>The downside to external financing is that it usually comes with a cost attached \u2013 usually in the form of interest repayments. Most businesses will see this as a worthwhile move for overall business growth though.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"External_Financing_Options_Pros_And_Cons\"><\/span>External Financing Options Pros And Cons<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>Bank Loans<\/li>\n<li>Equity Investment<\/li>\n<li>Crowdfunding<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Bank_Loans\"><\/span>Bank Loans<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Bank loans offer debt financing available from banks and other lending institutions that can be used to help with business operations, expansion goals and other capital needs. Money can be borrowed from these sources and repaid over a set period with interest.<\/p>\n<p>Common types of bank finance include:<\/p>\n<ul>\n<li><strong>Term loans <\/strong>where a set amount of money is borrowed then a fixed repayment schedule is agreed upon to repay the full amount plus interest.<\/li>\n<li><strong>Lines of credit<\/strong> like business overdrafts can be used with pre-approved borrowing limits. This can be used on a flexible basis and is useful for cash flow fluctuations.<\/li>\n<li><strong>Equipment financing<\/strong> is often used for big purchases such as photocopiers, or speciality manufacturing equipment and allows the cost of big-ticket items to be spread over some time.<\/li>\n<li><strong>Small business loans<\/strong> especially focus on business lending and will have preferential\/competitive interest rates.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Pros<\/strong><\/p>\n<ul>\n<li><strong>Access Significant Capital<\/strong> \u2013 Banks have more lending capacity than individual investors, with small business loans ranging from \u00a350,000 up to \u00a35 million+.<\/li>\n<li><strong>Flexible Repayment Timeline<\/strong> \u2013 Term loans allow 2-7 year repayment schedules, meaning manageable monthly payments rather than a balloon repayment.<\/li>\n<li><strong>Tax Deductible Interest<\/strong> \u2013 The interest expenses incurred on bank loans can directly reduce taxable income.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Cons<\/strong><\/p>\n<ul>\n<li><strong>Repayment Burden<\/strong> \u2013 Monthly principal and interest payments will be owed regardless of cash flow.<\/li>\n<li><strong>Loss Of Some Control<\/strong> \u2013 Loan agreements contain restrictive covenants on finances, operations, and other factors that restrict certain business decisions.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><img decoding=\"async\" class=\"wp-image-194171 size-large aligncenter lazyload\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-external-financing-1024x683.jpg\" alt=\"external financing\" width=\"800\" height=\"534\" \/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-194171 size-large aligncenter lazyload\" src=\"https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-external-financing-1024x683.jpg\" alt=\"external financing\" width=\"800\" height=\"534\" srcset=\"https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-external-financing-1024x683.jpg 1024w, https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-external-financing-300x200.jpg 300w, https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-external-financing-1536x1025.jpg 1536w, https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-external-financing-2048x1366.jpg 2048w, https:\/\/realbusiness.co.uk\/wp-content\/uploads\/2024\/02\/real-business-external-financing-scaled.jpg 1200w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/noscript><\/p>\n<h3 data-pm-slice=\"1 1 []\"><span class=\"ez-toc-section\" id=\"Equity_Investment\"><\/span>Equity Investment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Equity finance refers to capital that is raised by selling part of the ownership stake in a business to external investors. There is no requirement to repay the funds and the external investor benefits by sharing the future business profits and company value.<\/p>\n<p>Common sources of equity financing include:<\/p>\n<ul>\n<li><strong>Angel Investors<\/strong> \u2013 Wealthy individuals who invest their capital in early-stage startups.<\/li>\n<li><strong>Venture Capital Firms <\/strong>\u2013 Professionally managed funds that invest in companies with high growth potential.<\/li>\n<li><strong>Private Equity Firms<\/strong> \u2013 Similar to VC firms but invest in more mature, established businesses instead of startups.<\/li>\n<li><strong>Crowdfunding Platforms<\/strong> \u2013 Companies sell equity stakes to many small investors through internet platforms.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Pros<\/strong><\/p>\n<ul>\n<li><strong>No Repayment Requirements<\/strong> \u2013 Equity is permanent capital as long as investors retain shares, freeing cash flow.<\/li>\n<li><strong>Rapid Access to Capital<\/strong> \u2013 Can secure large investments from external sources faster than saving profits.<\/li>\n<li><strong>Investor Experience And Networks<\/strong> \u2013 Many investors also provide advice, mentorship, and industry connections along with their money.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Cons<\/strong><\/p>\n<ul>\n<li><strong>Loss of Control and Ownership Stakes<\/strong> \u2013 Issuing more company shares dilutes founders&#8217;\/executives&#8217; ownership percentages and decision power.<\/li>\n<li><strong>Investors Claim Future Profits<\/strong> \u2013 By owning equity, external owners profit from future financial success.<\/li>\n<li><strong>Ongoing Reporting Requirements<\/strong> \u2013 Investors typically gain information rights to receive financial statements, budgets, forecasts and other updates that you&#8217;ll need to provide regularly.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>This external financing source allows businesses to raise good amounts of cash based on the business&#8217; future potential rather than its current profitability or assets.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Crowdfunding\"><\/span>Crowdfunding<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Crowdfunding is gaining popularity all the time as a great way to raise money from a large pool of people. These tend to be regular members of the public rather than professional investors looking to make big profits. The idea is that many people offer small sums of money to combine with large amounts of cash needed. Social media, Kickstarter and SeedInvest are examples of crowdfunding platforms.<\/p>\n<p><strong>Pros<\/strong><\/p>\n<ul>\n<li><strong>Tap a Wide Investor Pool<\/strong> \u2013 Businesses have the potential to reach millions of potential investors instead of accreditation-limited angel and VC networks.<\/li>\n<li><strong>Marketing Exposure<\/strong> \u2013 High visibility campaigns build brand awareness and customer enthusiasm even if fundraising minimums are not met.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Cons<\/strong><\/p>\n<ul>\n<li><strong>Complex Regulations<\/strong> \u2013 Equity offerings must follow rules about maximum raises, investor eligibility, disclosures and more under Regulation Crowdfunding.<\/li>\n<li><strong>Relinquish Ownership<\/strong> \u2013 Equity crowdfunding does sell stakes in your company even if contributing smaller individual investments.<\/li>\n<li><strong>Numerous Stakeholders<\/strong> \u2013 Managing thousands of shareholders during major business decisions can be incredibly difficult.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>If your business can navigate the compliance requirements, crowdfunding opens access to capital from non-traditional sources based on social momentum for high-potential ventures.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Difference_Between_Internal_And_External_Financing_Summary\"><\/span>Difference Between Internal And External Financing Summary<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There are various external and internal finance sources available for businesses. The best type of funding for a business will usually be a mix of both internal and external finance sources. The key is to understand the pros and cons of each before making any major financial decisions that can impact business growth positively and negatively.<\/p>\n<p>As a business owner, you&#8217;ll need to make your mind up about which option is best for you: external vs internal finance. Internal sources are great if you have the money lying around, but external sources are usually necessary where more funds are required.<\/p>\n<p>Whatever the case, our guide today should serve as a helpful starting point when deciding which is right for you and your business.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Internal and external sources of finance are viable options for any business looking to source extra finance for different business activities. Money makes the world go round, as they say, and it&#8217;s no different for businesses. You might need to look for financing from external sources or internal sources for a variety of reasons, including: [&hellip;]<\/p>\n","protected":false},"author":26234,"featured_media":179842,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[11878],"tags":[12158,12159,11979,12013],"class_list":["post-179840","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-external-finance","tag-internal-finance","tag-jan-p","tag-p2023"],"views":1249,"_links":{"self":[{"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/posts\/179840","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/users\/26234"}],"replies":[{"embeddable":true,"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/comments?post=179840"}],"version-history":[{"count":0,"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/posts\/179840\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/media\/179842"}],"wp:attachment":[{"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/media?parent=179840"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/categories?post=179840"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/realbusiness.co.uk\/wp-json\/wp\/v2\/tags?post=179840"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}