Evaluation of Various Long Term Sources of Finance for Incorporated Businesses

Individual project

Table of Content
.........................................................................................................................................................1
MAIN BODY...................................................................................................................................3
Meaning.......................................................................................................................................3
Evaluation of Various Long Term Sources of Finance...............................................................3
REFERENCES................................................................................................................................1

MAIN BODY
Meaning
The term incorporation is used for referring to the legal procedure that is followed while
forming a company or corporate entity. Business incorporation of business is done for the
purpose of creating separate legal entity of such business (Kartavy, and et.al., 2021).
Unincorporated Business Entities are those businesses (Limited Liability Partnership, Limited
partnership, Limited Liability Company, Trust Entity or other business entities) that have not
been incorporated under Law but is established & managed according to State law. Incorporated
Business Entities refers to such business entities that are registered and have a separate legal
entity. Such businesses are registered within a state law.
Evaluation of Various Long Term Sources of Finance
Debentures: Debentures are a common source of finance available for companies that is cheaper
than the equity source of capital. Being an external source of finance the control over the
business stays with the existing owners only. This source of finance is available only for the
companies (Jain, 2021). The use of the debenture can help the incorporated business like the
public companies. The use of the debentures for the companies can be beneficial as it encourages
the long term funding source for the business and ensure its growth. This form of the funding is
also cost effective when it is compared to the other forms of lending the money. The debentures
do not carry any kind of the voting rights, and the financing with the debentures does not hold
the position to dilute the control of the shareholders and management authorities. Other bonds
and debentures are both the fundraising tools but the loans are to be paid back after some time
and at the setted date. On the other hand, debentures are secured against something that is
variable like inventory. The debentures are transferable but the loans are not transferable and no
collateral security is required in the but in the loan security is required.
Long Term Bank Loans: long term of the loans are among one of the most popular financing
source. This is the source of finance that is payable after long period like after five years or more.
Loans facilitated with the higher amount and are secured against the assets. Facilitating finance
under the long term of the bank loan can help by providing with the greater flexibility and