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We identify the sources of finance available to a business

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Owning a business in these tough times is no easy challenge. Costs are rising and the value of stock is falling as customers have less money to spend. Due to this, stock is being sold at a loss, simply to break even. One way to save your business is to inject some cash into it. In this article, we identify the sources of finance available to a business.

  1. Bank Overdraft - This short term credit facility is provided by your bank and is one of the most common used ways for a business to receive extra cash. It allows you to withdraw more than what is in your bank account. Interest must be paid on the amount overdrawn
  2. Loan - Loans can be borrows for short, medium or long term. This makes it ideal for long term business projects such as expansion or development. Loans can be a very expensive means of finance.
  3. Grants - Grants are given to businesses for programs or services that benefit the local community. Grants are given by the government or large private firms.
  4. Retained Profits - Retained profits are the undistributed profits of a company from the previous years. This money is usually held as a back up in times of financial need. This is the most ideal way of raising extra cash as there are no charges for using the facility.
  5. Working Capital - This is the sum of money that your company has for its day to day activities. This is also a no cost source of finance but requires that you are in profit and have the cash available.

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