MVPs KRT Arts, BH Commerce and 

AM Science (KTHM) College,  Nashik

Department of Commerce
Name : Manoj Ravindra Nikumbh
Class : M. Com II (Sem III)
Subject : Business Finance
Subject Teacher : Ms. N. D. Kale
Title of Presentation : Sources of Finance
 Points of Presentation

 Introduction
 Sources of Finance
Ø Long Term Finance
Ø Medium Term Finance
Ø Short Term Finance
 Conclusion
 Business Finance
 Business finance refers to capital and credit funds invested in the
business financing means making money available when it is needed.
 Business finance may be defined as, planning, raising, managing and
controlling all the money used or capital funds of any kind used in
connection with business.
 Sources of finance

 Every business is concerned with production and distribution of goods

and services. So, for smooth functioning of various business, it requires
money, therefore finance is known as the life of blood of every
business
 Sources of Business Finance
Business finance is classified into three types with reference to time
period
1. Long term finance
2. Medium term finance 
3. Short term finance
For carrying on business Operations.
 Long-Term Finance

Long term sources fulfil the financial requirements of a business for a

period more than 5 Years. 
It includes various other sources such as shares and debentures, long term
borrowing and loans from financial institutions.
Such financing is generally required for the acquisition of fixed asset such
as plant, equipment, machinery, land and building. Etc.
 Equity Shares

Equity shares are the main source of the finance of a firm. It is issued to
the general public. Equity shareholders do not enjoy any preferential
rights with regards to repayment of capital and dividend. They are entitled
to residual income of the company, but they enjoy the rights to the control
the affairs of the business and all the shareholders collectively are the
owners of the company.
 Preference Share
Share on which there is preference right to claim dividend during the life time of
the company and to claim repayment of the capital on the winding up.
The percentage of dividend is fixed in preference shares. The holders of
preference shares get the fixed dividend before any dividend is paid to other
classes of shareholders. At the time of winding up of the any company, the
preference shareholders can get back their capital before any other classes  of
shareholders can get back their money.
 Term Loan
A term loan is a loan from a bank for a specific repayment schedule and either a
fixed or floating interest rate. A term loan is often appropriate for an established
small business with sound financial statements. Also, a term loan may require a
substantial down payment to reduce the payment amounts and the total cost of the
loan.
 Medium term finance

Medium-term sources are the sources where the funds are required for a period
of more than one year but less than five years. The sources of the medium term
include borrowings from commercial banks, public deposits, lease financing and
loans from financial institutions.
 Short term finance

Short-term sources: Funds which are required for a period not exceeding one
year are called short-term sources. Trade credit, loans from commercial banks and
commercial papers are the examples of the sources that provide funds for short
duration.