Source of Finance

In: Business and Management

Submitted By innompila
Words 1452
Pages 6
I have been asked to identify the source of finance which are available for any business while I have also to assess the impact of those sources upon the business entity. Late, I have to evaluate and recommend the appropriate sources of finance for the chosen enterprise The Success Ltd.
Finance is a life blood of an organization. To commence the business or to expand it, finance is needed. Therefore, there are the sources of finance from where we can borrow money for the expansion or modernization of the business and these sources of finance have the cost to it.
There are a number of ways of raising finance for a business. The type of finance chosen depends on the nature of the business. Large organization are able to use a wider variety of finance sources than are smaller ones. Savings are an obvious way of putting money into a business. A small business can also borrow from families and friends. In contrast, companies raise finance by issuing shares. Large companies often have thousands of different shareholders.

Sources of finance Uses of finance
Shareholders Finance to set up and expand a business
Bank Loans to finance capital projects. Overdrafts to manage cash flow
Creditors Short term credit until goods have been sold To gain extra finance, a business can take out a loan from a bank or other or other financial institution. A loan is a sum of money lent for a given period of time. Repayment is made with interest. The lender of money needs to know all the business opportunities and risks involved and will therefore want to see a detailed business plan. The lender may also want some form of security should the business run into financial difficulty, and may therefore prefer to provide a secured loan.

Another way of raising short-term finance is through an…...

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