Reference and Bibliography 11
This assignment studies the different sources of finance available forvarious types of businesses. Firstly it is important to understand thedefinitions of different types of sources of finance, the advantages anddisadvantages before deciding which one is most suitable giving reasonsto why different sources of finance was chosen for the given case studies.
Types of sources of finance and their definitions
periods given below are approximate. It is important to notethat each lending organization will specify the exact number of years theloan duration will be for each category of short, medium and long term.
– are in the form of medium to long term loans (5 years ormore) and will often be for large amounts of money for starting up abusiness or to expand. Businesses will agree with the bank to pay amonthly installment with fees and interest charges. Banks usually requiresome form of security against the loan. The interest rate charged maybefixed or variable. Businesses can request for fixed interest rates (or shoparound to find the best deal) this will provide an easier repaymentschedule and businesses can plan and manage their finances better if therate is fixed.
– is a short-term loan and could be repayable within onemonth and less than 12 months. Interest rates are usually high and incur