BA Business, LSC UoS: Sources of Finance for Business Entities Report

This report provides a comprehensive analysis of long-term financing sources for various business entities, including sole traders, partnerships, private limited companies, and public limited companies. It delves into different methods of obtaining finance, such as the sale of assets, retained profits, long-term loans, bank loans, mortgages, share capital, credit for trade, and government grants. The report highlights the similarities and differences in financing approaches based on the business's structure, emphasizing the importance of finance in supporting operational activities and growth. It also provides a comparative analysis of financing options across different business structures, considering factors like duration, purpose, collateral, and conditions. The report concludes by emphasizing the critical role of finance in business operations and the diverse procurement methods available depending on the type and scale of the company.

Accounting for Business

Table of Contents
INTRODUCTION...........................................................................................................................3

INTRODUCTION
Finance seems to be a business's lifeblood. Without risk resources, whatever organisation,
regardless of its scale, existence, or field of operation, will not last long. There is a need for
financing in various types of companies will be illustrated in this article, along with the multiple
sources of financing production (Alanzi and Alfraih, 2017).
MAIN BODY
Sources of finance
The management of an operating company may use a variety of sources of funding to handle the
company's operational activities. However, financing can be obtained in a variety of ways
depending on the type of sector. There are two types of financing service delivery: long and
short. Lengthy financing is taken into account in this research article (Anghelache and et. al.,
2019).
Long term finance
That is the loan of an amount of income for just a duration of even more than 1 year in
order to carry out various organisational operations. There are various forms or approaches by
which a company can obtain funding; nevertheless, these approaches are divided into separate
categories depending on the scale and scope of the company. Various forms of business
companies obtain financing in various ways based upon their existence and scale, as seen below.
Sole traders
This is a self-employed person who owns and operates a company. The actual number of
employees is limited to one or two. Due to the fact that certain businesses typically have a lack
of funding, they often seek out funding to help them manage their various operating activities.
Restaurants, plumbing, and hairstylists are examples of such businesses (Duan and Yeh, 2018).
Sources of long term finance
Sale of assets: This form of long-term financing is shown when a company is in dire straits as
well as the company requires cash quickly. A sole trader may obtain funds using this approach
by exchanging business properties (Lin ed., 2017).
Retained profits: this is the revenues that remain in a company after various costs and, if
applicable, taxes have been deducted. Profits of this kind are ploughed back into the business by

the investor, who can use themselves as a reserve when needed. As a result, for a business
owner, it is classified as long-term financing.
Long-term loans: A sole trader business owner may obtain funding from a range of payment
institutions, including banks, which offer long-term lending with appropriate or fair interest
rates.
Partnerships
This is a group of people made up of two or more people who share and exchange their resources
and responsibilities in order to achieve a shared business goal.
Long-term financing sources
Acquiring a bank loan: The business employees regard this form of long-term financing as
among the most reliable. Associated with the long strategies of banks, a corporation may collect
a reasonable sum of money.
Mortgage: A partnership company may use this type of financing to hold all of its properties on
loan and collect funds. Banks or indeed any private provider can provide this service. In
collaboration companies, a share problem is a less popular method of raising funds.
In collaboration companies, a share problem is a less popular method of raising funds. Funds are
obtained by the collaboration company based on a long-term payout agreement in the form of
selling securities in this source of funding.
Private limited companies
These companies of a limited liability are privately run corporations that collaborate on a project.
They may have as little as 3 offices and as many as upwards of 100. (Picard and et. al., 2018).
Long-term financing sources
Credit for trade: Such sources assist the company in extracting funds as appropriate in
accordance with longer repayment policies. This could involve borrowing money from a private
person or a business, including a banking or a postal service.
Overdraft: Also known as bank advances, those were different terms under which a business can
obtain funds from financial institutions.
Share capital: An equity problem is among the most popular reasons for a corporation to obtain
capital in terms of a limited split of its outstanding shares.
Public limited companies

There are government-owned corporations that collaborate on a social enterprise. The
primary goal of these areas of political entities is to achieve social goals and devote their
organisational function to the welfare of mankind.
Long-term investment
Grants from the government: A bank loan is indeed an investment market that is usually granted
to numerous public institutes throughout the form of a foreign enterprise. When opposed to every
other financial institution or private vendor, those funds and grants are issued at really low
inflation.
Purchase of a rental: In this form of funding, the funds are acquired by a large-scale institution
and may be distributed in instalments with interest.
Public stock: These really are securities that aim to raise money on top of shares and pool it
together to form that assets of the company.
Similarities in terms of long term finance
Basis Sole
company
Partner firm Private firm Public firm
Duration 1 year more 1 year more 1 year more 1 year more
Purpose Performance
Growth
Development Efficiency and
development
Growth
Collateral Necessary Necessary Necessary Essential
Differences in terms of long term finance
Basis Sole traders Partnerships Private limited
companies
Public limited
companies
Collateral Collateral
required/
Required Always not
required
Required
Sometimes.
Conditions Conditions
based on sole
traders.
Conditions
based on
partnership
norms.
Conditions
based on private
company
norms.
Conditions
based on public
company
norms.
Relations Solo relations
with borrowing
Partners Company
agents.
Public dealings.

institutes.
CONCLUSION
From the above report, it could be assumed that financing plays a critical part in the firm's
organisational functioning. It is a means by which all corporate operations are carried out.
However, depending on the type and scale of a company, there are different procurement
methods.

REFERENCES
Books and Journals
Alanzi, K.A. and Alfraih, M.M., 2017. Does accumulated knowledge impact academic
performance in cost accounting?. Journal of International Education in Business.
Anghelache, C., Căpușneanu, S., Topor, D.I. and Marin-Pantelescu, A., 2019. Target Costing
and Its Impact on Business Strategy: Computer Program for Cost Accounting and
Administration. In Network Security and Its Impact on Business Strategy (pp. 20-43).
IGI Global.
Duan, Y. and Yeh, C.H., 2018. An Intelligent System Based Approach to Accounting Choices
Evaluation and Selection. In PACIS (p. 165).
Lin, Z. ed., 2017. The Routledge Handbook of Accounting in Asia. Routledge.
Picard, C.F., Durocher, S. and Gendron, Y., 2018. The colonization of public accounting firms
by marketing expertise: Processes and consequences. Auditing: A Journal of Practice &
Theory, 37(1), pp.191-213.