Sources of Finance for Small Business Start-ups, Large Business Expansion and Small Group of People for Acquiring Medium Sized Company

Introduction
• The section herewith illustrates the appropriate source for small business
start-up, a large business expansion and small group of people for acquiring
medium sized company.

Different sources of funds
 Owner's Capital
 Retained earnings
 Sale of Fixed assets
 Third Party Investment
 Bank loan
 Government grants
 Hire purchasing
 Issue of shares

Implications of sources
Sources Legal Dilution of
Ownership
Bankruptcy
Owner's capital
There is no legal
restriction of
generation of funds
by the owner's
capital.
Controlling power of
the company will be
diluted.
There will be no
financial obligation
on the organization
with the owner
capital due to
insolvency situation
will not arise.
Sale of fixed
assets
Similar to the
owner's capital,
there will be no legal
implications on sale
of fixed assets.
With the sale of
asset there will be
no change in
ownership position
of the business
(Dransfield, 2004).
Solvency of
business will be
affected in adverse
manner because
value of business
will be reduced.
Retained earnings
On this restriction
can be imposed by
shareholders of the
company because it
can reduce the
return of investment
Through retained
earnings there is no
change controlling
position of the
business.
It is a part of reserve
and surplus thus,
financial obligations
are not affected by
it. Consequently, it
cannot lead to the