Sources of Finance for Bubbly-Bakery

Planning for Growth -
source of finance

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
Evaluating potential sources of funds for the Bubbly-Bakery...............................................3
Analysing the best sources of funding for the Bubbly-Bakery for its afternoon event..........7
CONCLUSION..........................................................................................................................7
REFERENCES...........................................................................................................................8

INTRODUCTION
For the running the business effectively it is very essential to obtain the fund from the
right source having least risk over the business. The type of funding required is based on the
business plan and for how long it is required. This report provides an understanding about the
different sources of fund with their pros and cons and which source is most suitable for the
business.
MAIN BODY
Evaluating potential sources of funds for the Bubbly-Bakery
There are different sources of funds but the all the sources have been bifurcated into
two, that is, internal and external sources which is further bifurcated into short term, medium
term and the long term. A detailed description is given below.
EXTERNAL SOURCES
Short term finance
Bank overdraft: It is basically the facility which is being provided by the banks to its
customers (Campbell, 2017). In this, customers can make a withdraw of the amount greater
than the balance available in the account with a certain limit.
Advantages Disadvantages
 There is no requirement of collateral
or other security.
 It is much flexible and adjustment in
the amount can be made as per the
need.
 The interest rate is mainly variable
and greater than the bank loans.
 Chances of cash flow problem might
arise if the bank asks for the
repayment in the short notice.
Venture capital: In this type of funding, fuds are provided to the new business or for
expansion of it. It mainly occurs from the venture capital firms which is majorly specialized
in high risk financial portfolios. It is in exchange of the equity in the company.
Advantages Disadvantages
 It provides tax benefit to the
investors.
 Requires clear exit strategy for the
investors.
 Dilution of the control with the