subject: Things That You Should Know About Business Finance [print this page] The field of finance consists of three parts - investments, money and capital markets and business finance. Business finance basics is challenging as well as frustrating because the integral components like financial market, business structures and bond valuation rates change on a daily basis. Therefore there is a huge risk factor in business finance. In business finance, one needs to utilize the investment opportunities, determine the optimal rate of sales growth, and coordinate all aspects of a business.
Sources of business finance
The sources of business finance are given below:
Business owner's personal savings: Most of the businessmen use their own savings to finance their business. Thereby they don't have to depend on anybody for money. They use this money for various purposes such as for launching their business, for expansion and growth of the business.
Friends and family: When the business owners don't have enough money to finance their business, then they borrow money from friends and family. Normally, in these circumstances, friends and family either give the money as a loan or they use this money as an investment on the business. However, it depends from person to person.
Credit cards: Any business enterprise needs huge investment. Businessmen have to purchase small equipments, have to advertise about the company as well as about the products. They have to set up a basic infrastructure, do online purchases, etc. So, most of the businessmen have to use credit cards for business finance needs.
Bank loans: The most popular source of business finance is bank. Generally, the large commercial banks offer various types of financing options such as term loans, commercial real estate loans, and other specialized services.
Receivables financing: When you borrow against your company's receivables then it is called receivables financing. You need to pledge the company's receivables as collateral for a short-term loan. Thereby you can have some cash to operate the business until you get paid from your customers.
Equipment leasing: When you need equipments for business, you can lease them. In an open-ended lease agreement, you can buy the equipments by making an additional payment at the end of the lease term. In the closed lease, you can rent an equipment for a certain period of time and then either you have to give it back or take a new lease on a newer equipment.
