The various sources of business finance can be classified into three categories on the basis of:
(i) period basis
(ii) ownership basis
(iii) source of generation basis.
On the basis of period:
1. Short term finance
2. Medium term finance
3. Long term finance
Sources of Short Term Finance:
1. Loans and Advances
2. Bank Overdraft
3. Discounting Bills of Exchange
4. Trade Credit
5. Pledge
6. Hypothecation
7. Mortgage
8. Loans Against the Securities
9. Clean Loan
10. Commercial Paper (CP)
11. Hire Purchase Finance
12. Factoring
Sources of Medium Term Finance:
1. Loans from Banks
2. Loan from Financial Institutions
3. Lease Financing
Sources of Long Term Finance:
1. Shares (i) Equity Shares (ii) Preference Shares
2. Debentures
3. Retained Earnings
4. Public Deposits
5. Long Term Loan from Commercial Banks
6. The Loans from Financial Institutions
On the Basis of Ownership:
1. Owner’s Funds
2. Borrowed Funds
On the Basis of Generation of Funds:
1. Internal Sources
2. External Sources
