Sources of Finance

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Sources of finance

This assignment will look at the different sources of finance that are available to a small business or a big company. With each source of finance listed the report will assess the implications that can arise and along with this the report will look at the cost to the business to taking a certain source of finance.

All businesses need short-term finance from the very beginning to start up the business and to cover day-to-day running costs. This provides the business with working capital. However businesses also need long-term capital to help them to grow and expand, and this is paid back over a number of years. Without finance a business would find it difficult to accomplish anything, for example someone who decided to start up a shop would need finance at first to just buy the shop and the stock.

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Here is a table of the internal and external sources of finance which categorise them into short, medium or long term finances.

Sale of assets

An asset is money which will help start up a business. Companies often sell off assets such as premises or any other equipment.


An overdraft allows a business to withdraw more money from its current bank account than it contains, up to a certain limit agreed previously with the bank manager.

Bank loans

These are the main external sources of finance, they ...

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