Sources available to small-scale enterprise to raise funds

Sources available to small-scale enterprise to raise funds

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:

  1. Short-term loans;
  2. 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.

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