Sources available to the small-scale enterprise to raise funds –
Small business / Small-scale enterprise is a business that is smaller in size. It is independently owned and operated and is not dominant in its field of operation.
Loans taken for a definite period of time are called “term loans”. Based on the period, there are two types of loans:
- Short-term loans;
- Long-term loans.
A short term loan is a loan that is scheduled for repayment within 1 year. The timeline is not set in stone, and some lending companies view a period of fewer than 2 years as short term. It is a type of loan that is obtained to support a temporary personal or business capital need.
Long-term loans are loans that you repay over a period of one year or longer, usually in monthly instalments. But you’ll need good credit and established a business to qualify for long-term financing.
Various sources of Long-term loans:
- The issue of shares,
- An issue of the debenture,
- Loans from financial institutions,
- Loans from commercial banks,
- Public deposits,
- Preservation of Profits,
- Provident fund,
- Pension fund,
- Owner’s capital etc.
Various sources of Short-term loans:
- Loans from commercial banks;
- Public deposits;
- Equipment suppliers
- Trade credit;
- Discounting Bills of exchange;
- Bank overdraft;
- Advances from customers;
- Loans from friends and relatives;
- Owner’s capital etc.
So, these are the various sources of term-loans for an enterprise.
