Alternative Sources of Financing

Capital is the essence for the success of ventures. Ventures need to use metropolis to turn tail the business, such as product purchases, shop rent, to make profit, and even off need more roof if engaged in a large number of commercial projects. Capital is enterprises blood, driving get behind economic activities of enterprises and sustained impetus. Therefore, effectively raising capital is an important factor for the enterprise creation, survival and development. However, as the briny body involved in a dynamic environment, enterprises willing encounter more varieties of funding instruments and more complicated finance environment. There are various ways of raising money, but is the way you have chosen the best or about suitable for you?

Insufficient financing causes many small businesses to close down. straightlaced planning of the initial capital is a critical force input for your business or expansion. Generally, a companys operations dismiss be financed by dint of debt and some form of justice financing. (Timmons & angstrom unit; Spinelli 2004, p.451) These are two basic ways to chevy capital for your business.

Debt is often obtained in the form of a loan which must(prenominal) have loan interest. The most common bases of funds through debt are commercial banks, and different potential lenders may as well include trust companies, credit unions, private investors, finance companies and other institutional lenders (e.g., insurance companies, pension funds).



As an entrepreneur, you should be known with the lending requirements of the financial institutions before determining the type and the source of your debt financing. And the classification of debt may include short-term debt (less than 1 year), line-of-credit financing (to be drawn upon as needed) and long term debt (up to 10 years). (Stevenson 1999, p.185)

In addition to debt financing, you can obtain funds by equity financing as well. Through equity financing, companies can raise lots of...

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