SOURCES OF FUND FOR BUSINESS. Funding is the act of providing resources, usually in form of money (financing), or other values such as effort or time (sweat equity), for a project, a person, a business, or any other private or public institutions.
The process of soliciting and gathering fund is known as fund raising.
Funding such as donations, subsidies and grants that have no direct requirement for return of investments are called “Soft funding” or “Crowding funding”.
funding that facilitates the exchange of equity ownership in a company for capital investment via online funding is known as “Hyper funding”.
funds can be allocated for either short term or long term purposes.
Sources of funds for business are as follows:
Credit: This refers to a situation where certain institutions like banks give loan or credit to customers for business purposes
Donations: Business entity can recant funds from individuals, government and non-governmental organizations for business set up or expansion
Grants: Local or foreign organizations and government can give grants to business setup for service or product delivery to the people
Savings: Business set up can equally get fund through personal savings or company profits for either for re-investments or expansion
Subsidies: Government or other organizations may give subsidies to company.
This are materials given in kind or at reduce price to enable investors have access to the fund for production of goods and services
Taxes: Taxes generated by the government can be extended to potential investors to the provision of essential goods and services for the people
Shares: Shares can be described as the unit of capital of a company allocated to individuals. It is the interest of the shareholders in a company measured by a sum of money.
They are issued by quoted companies and are traded on the stock exchange market
Bonds: Bonds are securities issued by the government as a way of raising fund from the stock exchange market
Stock: Stock is a collection of shares into a bundle or consolidated shares. Stocks are usually quoted per N100 nominal value, but fractions may be bought or sold
Debentures: Debentures are loans of long term nature. It represents tax document; which acknowledges the indebtedness of a company.
They are secured on the assets of the company. In addition to raising capital by the issue of shares, a company may also borrow by the issue of debenture. It has a fixed rate of interest.Related Posts