If you’re looking for short-term business finance, there are plenty of options that can help you get your business underway. Here is what you need to know about business finance.
Small businesses require short-term funds to meet the current requirements in operations. These current requirements may cover payment of wages, salaries, taxes, creditors, repairs, etc. If purchase payments and sales revenue do not match at all times, short-term funds may be needed to help run the business. However, attaining short-term funds is not very difficult for the average business owner. There are many sources through which short-term funds can be obtained. Bank overdrafts are popularly used to get business finance. Clients are allowed to withdraw a particular amount of money beyond the initial account balance, making it easier for businessmen to deal with unexpected short-term expenses.
Other popular methods of obtaining short-term finances include bill discounting, advances from customers, installment purchases, bill of lading, trade credit and loans from financial institutions. All of these methods can help in meeting short-term business requirements with relative ease as they can be approached without much difficulty, and can provide you with the finances to keep your business running in the short run.
Medium-term finance refers to the funds required to run a particular business between the next one to five years. Medium term funds are usually needed to re-engineer the business and they help the firm’s management to complete capital projects in the stipulated time period. Medium term funds can be acquired from commercial banks, hire purchase, financial institutions, TFCs and debentures, and insurance companies.
Finances that are needed for a period of over five years are long term funds, and may be needed to take care of structural alterations in the firm, or for major modernization expenses. Long-term developmental projects and new business plans can also be initiated through long term finance. Long term capital can be obtained through equity shares – one of the safest and most secure methods – as the public subscribes for them and helps in raising capital. Retained earnings and leasing also make for fine options when it comes to raising capital for long-term needs. Other great ways to obtain long-term capital include loans from financial institutions or the sale of debentures. Regardless of what kind of business finance you may need, it can be easily obtained provided that you have a good credit history and a successful business.