Essay on Different Sources of Finance for Businesses

Different Sources of Finance for Businesses Introduction This assignment will look at the different sources of finance that are available to a small business or a big company. With each source of finance listed the report will assess the implications that can arise and along with this the report will look at the cost to the business to taking a curtain source of finance. All businesses need short-term finance from the very beginning to start up the business and to cover day-to-day running costs. This provides the business with working capital. However businesses also need long-term capital to help them to grow and expand, and this is paid back over a number of years. Without finance a†¦show more content†¦This is considered an external source as it is assumed that the money lent to the business will eventually be paid back to the private individual, sometimes with an extra amount to compensate the individual for the loan of the capital. It can be a short or long term source of finance, depending upon the amount invested and the decision of the person using their savings. Retail Banks This source of finance is mainly used by new and small businesses as this heading includes the retail banks such as HSBC, NatWest, Barkleys and RBS. The reason that small businesses use these banks is that they offer different types of accounts such as a current or savings account as well as being able to offer overdrafts. Also money is easily transferable through electronic transactions, thus making it easer to pay suppliers and employees. Whole sale Banks These banks such as Morgan Stanley and Benson offer the same products and advantages as a retail bank, but the service comes at a premium as the minimum deposit that a business can make is  £250,000. Other whole sale banks include the foreign banks. They offer the same service, but as the currency is different a business could end up making extra or loosing revenue made through the currency changes. Building Societies A buildingShow MoreRelatedBusinesses keep a close eye on the money they make and the bills they owe. Anything that is not paid immediately is financed. Critically discuss the d1624 Words   |  7 PagesIntroduction Finance of a business means that the business raises funds to run its activities. It is an essential part of running a business because without business finance, the business will not be able to develop, grow and even start. In addition, business finance keeps cash flowing. Businesses usually raise funds from the shareholders, long-term and short-term sources. There are risks on every decisions that investors make to finance a business as no one knows how will it goes in the futureRead MoreManaging Financial Resources Essay examples1182 Words   |  5 Pages 2. 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