Sources of Finance

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In this essay we will be looking at different sources of finance available for different type of business. Also will be looking at the definitions of different type of sources of finance, the advantages, disadvantages and also giving reasons to why different sources of finance was chosen for the given case studies.

Types of sources of finance
Bank Loan – is a long term loan and will often be for large amount of money for starting up a business or to expanding. Business will agree with the bank to pay installment monthly fees with interest charge.
Long term Loan – is a loan which is often being for a large sum of money and usually the payment period is more than 15 years. Usually is used for starting up new business,
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The estimated cost of the facility is £4.5 million. A long term bank loan will be suitable to for a large company planning to move as the estimated cost is £4.5 million and share issue will also be ideal as this can raise capital that can be used for the move, this is a long term source of finance. Shareholders will have to share the control of business, each share gives the shareholder a vote on the direction of the company and will spread the risk to the number of shareholders, and this will also reduce the amount of loan to borrow from the bank which will also result to fewer installments and less interest to pay.
Case 4:
A rugby club is anticipating turning fully professional after the team secured promotion to the Zurich premiership. To take this place in league, the league committees have insisted that it also improves facilities at the ground. It has been estimated that the cost of these two measures will be £500,000.
The best way to inject a source of finance in a rugby club is through finding a sponsor. A sponsor will bring money into the club and raise fund to enable the club to improve its facilities.
Advantages of having a sponsor:
• The marketer can reach different target of audiences
• The sponsors’ logo could appear on the shirts of the players, logo on the playing field etc.
• This gives different advertising that will encourage and promote increase in participation

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