How can Finance be Raised for a Business

The first 200 words of this essay...

How can Finance be Raised for a Business

Raising money can be a time consuming and difficult part of setting up a new business. Before the business can raise any finance it has to complete its business plan, and work out its cash flow and profit forecast. It is possible that the new business does not need to borrow any money.

If the finance has to be raised it is important for a business to know

* How much money is needed

* Why the money is required

* When it will be paid back

Without this basic information, lenders, even if they are family or friends, will not consider making an investment. Once the owners of the business have interested a lender, consideration has to be given to the cost of borrowing the money. The interest charged on all borrowing money is referred to as the annual percentage rate of interest (APR)

There are two main ways of raising finance for a business, they are from internal and external sources. Each of these sources is likely to be used by any business over its lifetime.

External Finance