SOURCES OF FUNDING FOR SME BUSINESSES​

FACTORS TO CONSIDER WHEN CHOOSING FUNDS

The following factors should be considered when choosing the right source of funds for businesses.

a. The Cost of the fund.

b. Purpose of the fund e.g. long term sources of fund for long term need or uses

c. Size of the business e.g. sole proprietor and limited liability company.

d. Financial status of the business.

e. The type of business structure e.g. sole proprietor or partnership cannot raise fund from the stock market.

Fund is the life blood of every business. All businesses require funding for the growth and expansion. Sources of funding for businesses can be divided into two parts namely Internal and External sources.

The fund can also be short term or long term.

The two main methods of sources of funding for businesses are:

i. Owners Capital or Risk Capital.

ii. Borrowed Capital.

source of funding for business

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FACTORS TO CONSIDER WHEN CHOOSING FUNDS

The following factors should be considered when choosing the right source of funds for businesses.

a.The Cost of the fund.

b.Purpose of the fund e.g. long term sources of fund for long term need or uses

c.Size of the business e.g. sole proprietor and limited liability company.

d.Financial status of the business.

e.The type of business structure e.g. sole proprietor or partnership cannot raise fund from the stock market.