Finacing of Business

Meaning
The primary purpose of all business is to earn a profit by producing and distributing goods or services. To achieve this goal, it requires a continuous supply of capital to operate the business. Financing of business is concerned with the flow of capital funds within the firm

Sources of Finance
The sources of finance for business include the following

*personal Savings
Personal savings of the owner of the business as well as financial aid from friends and relatives who might be interested in the business constitute what is referred to as personal savings

It is that part of fund invested in the business by the owner(s) which the business is under no obligation other to refund or pay interest on. It is often regarded as risk capital because
it is under the risk of being lost should the business fail. such fund can be recovered by way of individual or when the business winds up, the owner selling off the business assets

Bonds
The sale of bonds is widely used by companies to obtain long-term financing. a bond is a certificate of indebtedness indicating debt that is owned the bondholder by the company. It is a company debt that matures at a stated future date on which interest is paid periodically

Bank Overdraft
Bank overdraft are short-term financing provided by banks or financial institution to a company or individuals that may wish to undertake a project. Temporary financial problems could be overcome through overdrafts.

An overdraft in an over-drawn amount on an account with the bank. A company may be granted an overdraft facility in the form of form of allowing it to withdraw a sum of money greater than the balance standing to its credit.
Interest on overdraft is based on the amount actually overdrawn. The period of repayment of an overdrafts are therefore most suitable for investments that will pay back fast. It is a facility allowed to customers operating current account with the bank.

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