Essay regarding Sources of Fund

Options for Finance

Introduction

In this article we will be looking at different types of finance designed for different type of business. Also will be looking at the definitions of various type of sources of finance, the benefits, disadvantages and in addition giving reasons to why distinct sources of financial was selected for the given circumstance studies.

Types of sources of fund

Bank Loan – is a long-term loan and may often be for large amount of money for starting up a small business or to expanding. Business is going to agree with your bank to pay installment month-to-month fees with interest fee. Long term Loan – is known as a loan which can be often being for a huge sum of money and generally the payment period is more than 12-15 years. Generally is used intended for starting up new company, for expansion, buying fresh fixed property for the organization. Loans are generally paid on the monthly installments plus agreed set interest impose. Short term loan – is financial loan that is for a small amount inside the period of a few years, in addition agreed interest charge. Curiosity – Banking institutions provide providers by financing money in the form of overdrafts and financial loans and financial institution will charge for this service. The extra charge is known as interest, they are the profit built. The Bank of England units an interest rate where it lends to finance institutions. This rate of interest then influences the whole array of interest rates established by commercial banks, building societies and other institutions because of their own investors and credit seekers. It also will affect the cost of financial assets, such as provides and shares, and the exchange rate, which in turn affect consumer and business demand in lots of ways. Lowering or perhaps raising interest levels affects spending in the economy. (Source form www.bankofengland.co.uk)

Retained profits – also known as " Organic and natural growth” growth generated throughout the development and expansion from the business, these are profit of company. Place be achieved through: •Generating increasing sales – increasing income to effect on overall income level...