A M A C O M P U T E R U N I V E R S I T Y

Report
In
Business Finance

1|P a g e
 A M A C O M P U T E R U N I V E R S I T Y

 Learning Competences:
1. Cite Bank and Non-banks Institutions in the locality that would
sources of funds for business operations.
2. Compare and contrast the loan requirements of the difference
institutions
3. Draw a flow chart on the steps in loan application.
4. List down the obligation of entrepreneurs to creditors
5. Identify the uses of funds.

SOURCES AND USES OF SHORT-TERM AND LONG-TERM FUNDS

Sources and Uses of Short term funds

Short term funds are normally used to finance the day to day operations of the company.
It used for working capital requirements such as accounts receivable
And inventories. It can be used for bridge financing where a company has some maturing
obligations and does not have enough cash to pay such maturing obligations.

The following are the different sources of long term funds.

Suppliers Credit – Good service receive on deferred payment terms also called supplier
financing, which can give credit to the foreign importer to finance his purchase.

Advances from stockholder - Advances from shareholders represented funds advanced

or expenses incurred on behalf of the Company by shareholder corporations from time to
time. These advances were unsecured, non-interest bearing and are payable on demand.

Credit Cooperatives - A bank that holds deposits makes loans and provides other
financial services to cooperatives and member-owned organizations. Also known as
Banks for Cooperatives.

Bank Loans – Bank loan an amount of money loaned at interest by a bank to a

borrower, usually on collateral security, for a certain period of time.

Lending Companies- Organization such as a bank, credit union, or finance company that
makes loans. It may or may not also be a depository institution.

Informal Lending - Often referred to as “loan sharks”, informal moneylenders are

frequently criticized for lending money at exorbitantly high interest rates and preying on
poor people in dire situations.

2|P a g e