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Unit 3: Sources of Finance
Mahesh Kumar Sarva, Lovely Professional University
Unit 3: Sources of Finance Notes
CONTENTS
Objectives
Introduction
3.1 Financial Needs and Sources of Finance of a Business
3.2 Long-term Sources of Finance
3.2.1 Owners’ Capital or Equity
3.2.2 Preference Share Capital
3.2.3 Debentures or Bonds
3.2.4 Types of Debentures
3.2.5 New Financial Instruments
3.2.6 Loans from Financial Institutions
3.2.7 Internal Accruals
3.3 Issue of Securities
3.3.1 Public Issue
3.3.2 Rights Issue
3.3.3 Private Placement
3.3.4 Bought out Deals
3.3.5 Euro Issues
3.4 Sources of Short-term Finance
3.4.1 Trade Credit
3.4.2 Bridge Finance
3.4.3 Loans from Commercial Banks
3.4.4 Commercial Papers (CPs)
3.4.5 Inter-corporate Deposits (ICDs)
3.5 Venture Capital Financing
3.6 Leasing and Hire Purchase as a Source of Finance
3.7 Deferred Credit
3.7.1 Capital Assistance Seed
3.7.2 Government Subsidies
3.7.3 Sales Tax Deferments and Exemptions
3.8 Summary
3.9 Keywords
3.10 Review Questions
3.11 Further Readings
LOVELY PROFESSIONAL UNIVERSITY 31
