Various Sources of Raising Funds for a Business

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 30, 2023

Sources of Business Finance

To meet long-term, medium-term, and short-term financial requirements, companies can use various sources to raise funds for their business.

This article provides an overview of the main methods used in today's business landscape.

Methods For Raising Long-Term Funds

  • Plowing back earnings (for existing companies)

Methods For Raising Medium-Term (or Intermediate-Term) Funds

  • Issue of debentures
  • Public deposits
  • Bank loans (term loans)
  • Assistance from specialized financial institutions

Methods of Raising Short-Term Funds

  • Bank overdraft
  • Cash credit
  • Advances from customers

Sources of Raising Borrowed Funds

  • Debentures
  • Financial institutions
  • Public deposits
  • Commercial banks

Sources For Raising Long-Term Borrowed Funds

  • Debentures
  • Financial institutions

The Pattern of Capital Structure

A joint-stock company is free to choose its own capital structure. This may happen through:

  • Issuing equity shares
  • Issuing both equity shares and preference shares
  • Issuing equity shares, preference shares, and debentures

Various Sources of Raising Funds for a Business FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.