Wasi is a self-employed photographer, working from home. He uses mobile banking for most of his payments.

Mark scheme

Marking points from the official mark scheme (May/June 2022). The mark or mark type is shown in brackets.

1. [1] Sole trader
2. [1] Private limited company
3. [2] Advantages: It can be used on the move / anywhere / at home (1) not always requiring an internet connection (1)
4. [2] Advantages: Convenient/fast to make payments / no need to use cash (1) by clicking on payment function/technology / payment is immediate (1)
5. [2] Advantages: No need to go to bank branch / queue at bank / post remittances (1) saving time/money (1)
6. [2] Advantages: Mobile banking is available 24/7 (1) wherever there is mobile network reception (1)
7. [2] Advantages: Most people have smartphones (1) easy to transfer payments (1)
8. [2] Disadvantages: Mobile banking users are at risk of receiving fake SMS messages / scams / hackers (1) leading to loss of money (1) may not want to buy from Wasi (1)
9. [2] Disadvantages: Extra cost (1) if bank charges a fee for the service/app (1)
10. [2] Disadvantages: Less personal customer service (1) than visiting a branch (1)
11. [2] Disadvantages: Usually needs an internet connection/use of smartphone (1) so some people may not have wi-fi or phone access/connection problems (1)
12. [2] Disadvantages: May still need to go to bank (1) to pay in cheques (1)
13. [2] He is self-employed/sole trader (1) seen as a high risk (1) that he will not be able to repay (1)
14. [2] No credit history / lack of creditworthiness / past track history (1) unable to prove he can make repayments from a new business (1)
15. [2] Limited assets / small business size / lack of collateral (1) to offer lender as security in case repayments are not made (1)
16. [1] A loan is medium or long-term finance provided by banks. It is borrowed for a set period within an agreed repayment schedule. The repayment amount will depend on the size and duration of the loan and the rate of interest.
17. [1] Suitability of loan: The loan is not repayable on demand, so long as regular repayments are made
18. [1] Suitability of loan: Interest rates are usually fixed so Wasi will know the level of repayments for the duration of the loan which will help him to plan his cash flow
19. [1] Suitability of loan: The bank will not take any profits or own a share of the business
20. [1] Suitability of loan: Wasi could have difficulty making regular repayments if his customers don't pay him promptly
21. [1] Suitability of loan: Some loans are secured against the assets of the business or personal possessions, e.g. Wasi's home, so his assets or home could be at risk if he cannot make the repayments
22. [1] Suitability of loan: There may be a charge if Wasi wants to repay the loan before the end of the loan term
23. [1] Alternative forms of finance might be better for Wasi e.g. a mortgage on his house or selling some of his personal assets
24. [1] Alternative forms of finance might be better for Wasi e.g. buy from a supplier that offers hire purchase – if the interest charged was less than for the loan, and if he has the cash to pay the deposit usually required for HP
25. [1] Alternative forms of finance might be better for Wasi e.g. take out a mortgage, if the lender is prepared to lend against a studio
26. [1] Evaluation: The studio will become a fixed asset of the business once Wasi buys it. Loans are more suited to this purpose than overdrafts which are used to pay day-to-day expenses. So, a loan seems most suitable if he doesn't have enough cash available, but it will depend on how much the studio costs. If it is a large amount of money, which would have to be repaid over a longer time, then a mortgage may be a more suitable option because it would charge less interest.