Just own capital is not sufficient to operate the business. The entrepreneur has to make planning for getting money. He has to decide when, where, how the money will collected? What security will be given for different loans.
Sources of finance are needed for short term, medium term and long term financial need. Sources of finance are collected under the financing planning of company. Cost of capital, return, risk, financial strategy are main factors which we think before selecting any source of finance.
Following are main source of finance
(A) Long term Sources of Finance
1. Equity share capital
2. Preference share capital
3. Retained Earning
4. Debentures and bonds
5.Loan from financial institutions
6. Loan from State financial corporations
7. Loan from commercial banks
8. Venture capital funding
7. Asset Securitization
8. International financing like euro issue, foreign currency loans
(B) Medium Term Sources of Finance
1. Preference shares
2. Debentures
3. Public deposits/ fixed deposits for a duration of 3 to 4 years
4. Medium term loan from commercial banks and other financial institutions
5.Lease financing/ hire purchase financing
6. External commercial borrowings
7. Euro - issues
10. Foreign currency bonds
11. Loan in bitcoins
12. Foreign currency bonds
(C) Short term Sources of Finance
1. Trade Credit
2. Bank draft
3. Get Money from Public fixed deposit for a period of one year or less
4. Advance received from customers
5. Various short term provisions
Related : Financial Need
Following are main source of finance
(A) Long term Sources of Finance
1. Equity share capital
2. Preference share capital
3. Retained Earning
4. Debentures and bonds
5.Loan from financial institutions
6. Loan from State financial corporations
7. Loan from commercial banks
8. Venture capital funding
7. Asset Securitization
8. International financing like euro issue, foreign currency loans
(B) Medium Term Sources of Finance
1. Preference shares
2. Debentures
3. Public deposits/ fixed deposits for a duration of 3 to 4 years
4. Medium term loan from commercial banks and other financial institutions
5.Lease financing/ hire purchase financing
6. External commercial borrowings
7. Euro - issues
10. Foreign currency bonds
11. Loan in bitcoins
12. Foreign currency bonds
(C) Short term Sources of Finance
1. Trade Credit
2. Bank draft
3. Get Money from Public fixed deposit for a period of one year or less
4. Advance received from customers
5. Various short term provisions
Related : Financial Need
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