Source of Finance

Source of Finance:

Just own capital is not adequate to operate the business. The industrialist has to make planning for receiving money. He has to choose when, where, how the money will gathered? What security will be provided for various loans?

Sources of finance are required for short term, medium term and long term financial necessitate. Sources of finance are composed beneath the financing planning of company. The costs of capital, risk, return, financial strategy are major factors that we think before choosing any source of finance.

The main sources of finance are as follows:

(A) Long term Sources of Finance:

•    Equity share capital
•    Preference share capital
•    Loan from commercial banks
•    Debentures and bonds
•    Retained Earning
•    Loan from financial institutions
•    Loan from State financial corporations
•    Venture capital funding
•    Asset Securitization
•    International financing like euro issue, foreign currency loans

(B) Medium Term Sources of Finance:

•    Preference shares
•    Debentures
•    Euro - issues
•    Public deposits/ fixed deposits for duration of 3 to 4 years
•    Medium term loan from commercial banks and other financial institutions
•    External commercial borrowings
•    Lease financing/ hire purchase financing
•    Foreign currency bonds
•    Loan in bit coins
•    Foreign currency bonds

(C) Short term Sources of Finance:

•    Trade Credit
•    Get Money from Public fixed deposit for a period of one year or less
•    Bank draft
•    Advance received from customers
•    Various short term provisions

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