Sources of finance
The main sources of finance are:
- An agreement with the bank to overspend on an account.
- A source of finance offered by a bank which must be paid back with interest over a set term.
- A grant is a payment made that does not have to be paid back.
- A loan on property.
- When a limited company offers equity to investors.
- When a business looks to sell off their debt with the aim of gaining short-term finance.
- sale of Something a business owns that has monetary value such as a delivery van or money in the bank.
- Raising finance for a project by gathering sums of money from a large group of people.
- A medium- to long-term loan used by large companies to borrow money, at a fixed rate of interest.
- Profit held back in the business for reinvestment rather than being distributed as dividends.
- Finance that investors provide to startup companies and small businesses.
There are justifications for using each source of finance and it is important that a business chooses the appropriate source of finance for their needs.