Choosing Your Preferred Source of Finance
When it comes to the choice of a source of funds for your needs, there are a lot of factors you are to take into consideration. Hereunder is a look at some of the most important things that you are to taken into account as you look for the right source of funds for your needs.
The much that you require is one of the things that you are to take into account as you settle on your preferred source of funds. One thing that you are going to realize going forward is that there are some sources of funds that are not quite in a position to raise you and get you the much that you may be in need of. A good example is like the case with the bank overdrafts which are of course a source of funds but will limit you on the amounts that you can withdraw at the end of the day anyway. Where there is such a need for large amounts, it would be advisable for you to consider getting the funds from such sources as from shares and debentures instead. And in the event that you are looking forward to a source of finance to help facilitate some of the day-to-day operations within a business such as paying for wages, you may not be wisely advised to issue new shares for the same and instead fund them through such sources as is in the bank overdrafts and the like sources of funds.
The other factor to consider when choosing your source of funds is the type of expenditure for which the funds are sought. The long term sources of finance are generally best suited for the long term capital expenditures such as putting up a new plant or buying machinery for your operations. Then you are to opt for the short term sources of funds where you are looking for funds to help finance some of the short term and revenue matters in your business such as payment of suppliers and the like needs.
As you settle for the right source of funds for your needs, you are to equally take into account the duration of time for which the fund are required. Where the funds are to be sued in projects that will see them tied over a long period of time, then it would be advisable for you to get them from the long term sources of finance. And where they are to be sued to fund short term projects, then the shorty term sources would be best for you.
Your business size and capacity to borrow as well must be looked into as you settle for your preferred source of funds. In the event that you have such a large business that has grown and is as stable, then the larger sources of funds would be a good option for you to consider.