What You Need to Know Concerning Business Finance
Finance is a broad term that involves so many things. In school and universities, it is used to represent a form of study mostly known accounting and finance. However, many people tend to confuse between these two terms. However, accounting is part of finance as it focuses on daily cash flows and how money is handled. However, Finance deals with the overall management of assets and liabilities.
When the term finance is used for your individual or family matters, it is known as personal finance. It addresses areas like investments, income planning and tax calculations. Savings plans and retirement planning are some of the parameters that personal finance address. It also revolves around activities like financing education programs, insurance cover, and policies, real estate among other areas. Check out https://bonsaifinance.com for more specific ideas.
In most cases, financial positioning and protection, tax, retirement and investment planning are areas addressed by personal finance. When it comes to public finance, it deals with how government, governmental organizations and other public entities deal with funds allocated or distributed by the government when funding development projects. It covers areas like revenue collection, allocation, and budgeting and debt issuance.
Business or corporate finance is another area that should be looked at with seriousness more so by investors who would like to venture into different types of businesses. Corporate or Business Finance deals with how a business is able to raise money to fund its operations. When you are thinking of starting up a business, you need to look for startup financing sources. There are two major sources of finance for startups or established businesses. These include.
1. Equity financing.
When it comes to equity finance as the main source of financing for your business, it means you are exchanging some sort of business ownership for finances that will be used to fund business investments. This is a permanent investment whereby the company will never repay this money later. Under equity financing, there are some sources of funds that can be used to finance your business operations.
Some of the common sources include personal savings. This is the first and best place to seek equity for your business. Life insurance policies are other good sources of personal finance. However, term insurance is not included. Other sources of equity finance include home equity loans as well as friends and relatives. Venture capital is another source. Angel investors, equity offerings, government grants, and warrants are also used as sources of equity finance. You'll want to go to this website for useful info.
2. Debt financing.
This service is also used as a source of business Finance. It involves borrowing funds to fund your business. These funds can be borrowed from conventional banks, lenders, and creditors. However, you have to clearly outline the repayment method and period and terms. Debt financing also comes in form of secured or unsecured loans.
On the other hand, you can borrow from friends and relatives, commercial lenders and banks as well as finance companies. You can also borrow from government programs and bonds. Another source of business finance is lease contract. Here is a finance tip you'll want to know about: https://youtu.be/GDNyPNP22Qk