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Sources of Short-Term and Long-Term Funds

The document identifies sources of short-term and long-term funds for businesses. Short-term sources include supplier credit, advances from owners, credit cooperatives, banks, credit cards, lending companies, and pawnshops. Long-term sources include equity investors, internally generated funds, banks through long-term loans, and bonds. Both short and long-term sources can also include lending companies that charge higher interest than banks.

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Zybel Rosales
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1K views13 pages

Sources of Short-Term and Long-Term Funds

The document identifies sources of short-term and long-term funds for businesses. Short-term sources include supplier credit, advances from owners, credit cooperatives, banks, credit cards, lending companies, and pawnshops. Long-term sources include equity investors, internally generated funds, banks through long-term loans, and bonds. Both short and long-term sources can also include lending companies that charge higher interest than banks.

Uploaded by

Zybel Rosales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Week 8 Date: March 22, 2021

Subject Business Finance


Type of Activity Concept Notes
Activity Title Sources of Short-term and Long-term Funds
Learning Target Identify the sources of short-term and long-
term funds for the business
Reference Title Business Finance
Author/s Albert N. Gamatero
FINANCING
DEBT AND EQUITY
FINANCING

• means to provide funding for a particular need


• Types: debt and equity financing
DEBT FINANCING

• means you’re borrowing money from an outside


source and promising to pay it back with
interest by a set date in the future.
EQUITY FINANCING

• means someone is putting money or assets into


the business in exchange for some percentage
of ownership.
SOURCES OF
SHORT-TERM FUNDS
SHORT-TERM SOURCES OF FUNDS

Short-term financing is revolving and is used for


purposes like inventory or material costs.
SHORT-TERM SOURCES OF FUNDS

• Suppliers Credit – refers to the extension of payment


due date by suppliers.
• Advances from stockholders or other owners –
personal funds advanced by a stockholder to a company
that usually requires interest.
• Credit cooperatives – provided lending services to its
members. Members usually pay contributions to the
cooperative.
SHORT-TERM SOURCES OF FUNDS

• Banks – provides several loan products catering to different


types of needs.
• Credit Cards – option for business owners who may not be
able to obtain a traditional loan.
• Lending Companies – companies that are dedicated to
lending. They usually charge higher interest than banks and
their credit requirements are more lenient compared to banks
• Pawnshops – provides funds in exchange of collateral,
usually jewelry or other items which are of value.
• Informal lending sources (5/6)
SOURCES OF
LONG-TERM FUNDS
LONG-TERM SOURCES OF FUNDS

Long-term financing is considered an installment,


and typically finances machinery, equipment, or start-
up costs.
LONG-TERM SOURCES OF FUNDS

• Equity investors – these are the individuals/corporations


which are issued common stock/preferred stock
• Internally generated funds – not all profits are distributed
to stockholders. Undistributed profits can be used by the
company for their funding requirements.
LONG-TERM SOURCES OF FUNDS
• Banks – they provide long-term loans, depending on the
nature of the need. For example, a 5-year to 10-year loan
may be granted if the purpose of the loan is construction of
an office building.
• Bonds – these are examples of debt securities that need to
be registered with Securities and Exchange Commission
before they are issued to the public
• Lending companies – they can also provide long-term
loans. They usually charge higher interest than banks and
their credit requirements are more lenient compared to
banks

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