Businesses whether it is just starting up or established companies require monies to finance its operations ranging from paying staff to buying machinery and equipment.
Generally, day to day working capital for a business ideally it should be financed by shorter term finance facilities such as bank overdraft, credit cards, requesting credit facility from suppliers and so on. Similarly, buying machinery with an economic useful life longer than one year should be financed by long term loans like hire purchase or leasing so that the finance cost also often being referred to as interests on loans are spread over the useful economic life of the assets.
There are numerous sources of finance to be considered when come to raising monies for your business.
Short Term Finance
Short term sources of funding include the following:
- Trade creditors
- Factoring and invoice discounting
- Block discounting
- Bridging loans
- Long Term Funding Options
Long Term Funding Options
And for long term financing needs options are listed below:
- Bank loans
- Fixed rate loans
- Variable rate loans
- Hire Purchase
- Sale and leaseback
- Directors’ personal loans to the business.
Borrowing from banks, building society or other financial institutions require some form of guarantees to the loans in addition to that your business must have a healthy financial statements.
Concise Accountancy – Complete business finance solutions