Long Term Sources:
The amount of funds required by a business for more than five years is called long-term finance. Generally this type of finance is required for the purchase of fixed assets like land and building, plant and machinery furniture, etc. It include sources such as shares and debentures, long-term borrowings and loans from financial institutions.
Short Term Sources:
Short-term funds are those which are required for a period not exceeding one year. These sources include Trade credit, loans from commercial banks and commercial papers etc. Short-term finance is used for financing of current assets such as accounts receivable and inventories.
