In this assignment we will be looking at different sources of financeavailable for different type of business. Also will be looking at thedefinitions of different type of sources of finance, the advantages,disadvantages and also giving reasons to why different sources of financewas chosen for the given case studies.
Types of sources of financeBank Loan
– is a long term loan and will often be for large amount of money for starting up a business or to expanding. Business will agreewith the bank to pay installment monthly fees with interest charge.
Long term Loan –
is a loan which is often being for a large sum of moneyand usually the payment period is more than 15 years. Usually is used forstarting up new business, for expansion, buying new fixed assets for thebusiness. Loans are usually paid on a monthly installments plus agreedfixed interest charge.
Short term loan
– is loan that is for a small amount within the period of 5 years, plus agreed interest charge.
– Banks provide services by lending money in the form of overdrafts and loans and bank will charge for this service. The extracharge is called interest, these are the profit made. The Bank of England sets an interest rate at which it lends to financialinstitutions. This interest rate then affects the whole range of interestrates set by commercial banks, building societies and other institutions fortheir own savers and borrowers. It also tends to affect the price of financial assets, such as bonds and shares, and the exchange rate, which