Source of Finance

Sources Of Finance terms refers to the Sources from where an firm can get investments or money to run the business. Needs of Money :-
1. To run the business.
2. To maintain the status in market
3. For growth of Business.
4. To stay in compition of market etc.
These are some basic needs of finance on the basis of Needs of Finance there are different-2 Sources of Finance too which are as follows :-
I. On basis of Time Period :-
    A. Long-Term Finance (---10 Years or more----)
    B. Short- Term Finance (1 to 3Years)
    C. Mid- Term Finance(5 to 10 Years)




A. Long-term sources of finance: Long-term financing can be raised from the following sources:

• Share capital or equity share
• Preference shares
• Retained earnings
• Debentures/Bonds of different types
• Loans from financial institutions
• Loan from state financial corporation
• Loans from commercial banks
• Venture capital funding
• Asset securitisation
• International

B.Medium-term sources of finance: Medium-term financing can be raised from the following sources:

• Preference shares
• Debentures/bonds
• Public deposits/fixed deposits for duration of three years
• Commercial banks
• Financial institutions
• State financial corporations
• Lease financing / hire purchase financing
• External commercial borrowings
• Euro-issues
• Foreign currency bonds.

C.Short term sources of finance: Short-term financing can be raised from the following sources:

• Trade credit
• Commercial banks
• Fixed deposits for a period of 1 year or less
• Advances received from customers
• Various short-term provisions