Sources of Finance;

Monday, September 27, 2010

There are many things to consider when a business tries to obtain money. A business has to examine the amount of money they can raise in a way that they can repay it and manage the requirements or conditions of the people that provide the money to them.

If a business borrows money from a bank then they have to be confident that they will generate enough money to pay the interest and principal repayment each month. If the business borrows that money and then can't pay it back, there are all kinds of problems that start to happen. The owners of the business can lose control of it and others will take the business over.

If a business feels they can issue equity to raise money, they have to feel confident the people who provide the money will be happy with the amount of money they will receive over time in the form of dividends or from selling the stock at a higher value then their initial investment..

Examples of sources of finance;

• loans from banks, other businesses, friends,

• equity from investors on a stock exchange or private investors like venture capitalists or wealthy individuals,

• suppliers who give you good repayment terms of things you have bought from them,

• government programs,

• Kidse-marketplace.com is using a seed capital financing program.