What do we call finance sources that originate outside of the business?

The correct answer is external finance, which refers to funding that comes from outside the business itself. This can include loans from banks, investments from shareholders, or funds raised through issuing bonds or other financial instruments.

External finance is crucial for businesses, especially when they are looking to kickstart operations, expand, or navigate periods of cash flow challenges. Using external sources allows a business to access larger sums of money than it might have available internally, helping support growth and operational needs.

Internal finance, on the other hand, comes from within the business, such as retained earnings or reinvested profits. Private finance typically refers to funding from private investors but does not cover all external sources. Public finance is usually associated with government financing or public sector funding, which is not the focus here.