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Sources of Finance (Factors to consider before making financing decision…
Sources of Finance
Factors to consider before making financing decision
Legal structure
Size of existing borrowing
Amount required
Flexibility
Cost
Use and time period
Internal sources
Sale of assets
Managing working capital more efficiently
Profits retained in the business
Internal sources of finance
Personal finds
External sources
Medium term
Hire purchase and leasing
Medium term bank loan
Long term
Long term loans from banks
Debentures
Grants
Venture capital
Business angels
Microfinance
Subsidies
Short term
Trade credits
Debt factoring
Bank overdrafts
Revenue expenditure
All other cost that are not fixed.
Capital expenditure
Purchase of assets expected to last for more than one year