Sources of Financing Essay

940 Words Nov 29th, 2014 4 Pages

1.1 Sources of Financing

There are basically two types of financing; debt and equity financing. Equity financing means trading a share of ownership ofbusiness for a financial investment in the organization or company. Investment in the equity results in sharing of company’s profit and loss. Equity financing represents permanent investment in an organization and cannot be paid back at later stage. Equity financing is done by the investment throughpersonal savings, life insurance policies, home equity loans, friends and relatives, venture capital, angel investor, government grants, equity offerings, initial public offerings and warrants. Debt financing includes obtaining trusts from lenders with the stipulation of reimbursing the
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The implication of not having a composed legitimate contract between both parties can be a problem when one side neglects to satisfy his or her commitments. The best private financial specialists would not offer cash to agents until they have performed due steadiness on organizations; due persistence is the procedure of checking annual statements, and measuring resources against liabilities.

Other income streams, for example, leasing property or receiving dividend from stock shares can be profitable and beneficial; in any case, these sorts of monetary sources regularly have their good and bad times. For instance, residentsor citizens may leave unexpectedly or run out on the rent; leaving the stockholder withno value to be received for their staring investment.Everymonetary source will have its suggestions, advantages and disadvantages. The way to discovering the right money related source is to look at the benefits and drawbacks and discover the best fit for a specific speculation opportunity, business advances, or other monetary need.

1.3 Source of Financing for Business Project

Friends and family members may be the most tolerant financial specialists. They do not have a tendency to make compromise over home and they

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