Having access to finance is important to business success and survival. What is more important, however, is determining the most appropriate method of financing for your purpose.
The three most common methods of finance are:
- Debt – financing provided by an external source, such as a bank.
- Equity – financing provided by an owner or an investor.
- Internal funds – generated through cash flow and profits which are used to fund the ongoing operations and expansion of the business.
Other sources of finance which you may want to consider for your business include venture capital, angel funding, crowd funding and peer to peer lending. Some banks offer loans for entrepreneurial activity and start-ups.
Complete this short module to find out more about what you should consider when deciding on the right type of finance for your needs.