Planning the finance for my new business.

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Finance

Introduction

Finance is an essential aspect of making a business successful because if a business is not financed properly the business will become bankrupt. Businesses need money for all sorts of things. Some money will be needed before the business is ready to open. More finance will be needed just to keep the business running on a daily basis. Once the business has been operating for a while, it may need further capital to help it progress into the future. Financing a business is the process of using research to organise a firm's capital and ensure that a business does not exceed its budget.

Sources of Finance

There are many sources of finance which help businesses to gain all the money they need to start-up or expand. Two types of sources are available to a business, short term sources and long term sources. Short term sources include overdrafts, trade credit, factoring, higher purchase, loans and foreign loans. Long term sources include mortgages, retained profits, grants, venture capital, equity, share capital, debentures and contract hire.

An overdraft is an agreed limit with a bank to overspend the businesses account to a specified limit, this benefits