Sources of funding in an established business

study of the various sources of funding in an established Business
An established Business faces lesser problems compared to the startup companies who have to struggle and haggle behind every possible person and loan for an investment since the first thing to start a Business is “Money”. With the convenience of getting credit from raw material suppliers, the Established Business firms enjoy a good relationship with the raw material providers who are ready to collect the payment later, another major difference when compared to start-ups who need to have a hold to gain that faith.
Similarly, the banks also apply the same concept of providing loans without much of fuss as their trust is regained by these already successfully exisiting firms, who otherwise ask for a proper Business plan and the amount provided by the loans also have a great difference when compared to that of start ups.
Private banking, the term for banking, investment and other financial services are provided by banks to private individuals investing sizable assets. The term "private" refers to the customer service being rendered on a more personal basis than in mass-market retail banking, usually via dedicated bank advisers. These are gaining a lot of impetus with the Industrial sector growing and with the improvement of the bank services due to the immense competitions. The banks can furnish with all the desired loans at reasonable rates to these established Business firms.
Numerous Private Financial institutes also are easing the financial needs of the Enterprises and the financial institutions and their borrowers manage asset/liability risks and objectives. Private finance initiatives were originally started as part of the British government’s strategy for providing high quality services. A PFI is used when it meets certain requirements and presents a clear value for money and does not surrender any terms or conditions of the workforce. The Financial Institutions are owned by Private Parties. Various such institutions like HDFC, Muthoot Pappachan Group, Citi Group,Export Import Bank of India - Exim BankIndustrial Development Bank of India -IDBI , Industrial Finance Corporation of India - IFCI, Life Insurance Corporation of India - LIC, National Bank for Agriculture and Rural Development - NABARD,National Housing Bank - NHB, Power Finance Corporation Limited, Small Industries Development Bank of India - SIDBI, Securities Trading Corporation of India Limited - STCI, Unit Trust of India - UTI .These institutions are owned and managed by private people. These Financial Institutions also provide good financial services to common man. Few banks like HDFC (Housing Development Finance Corporation Limited) offer specialized financial services to their customers through partnerships with some of best financial institutions worldwide.
Money market is another very commonly funding source for the established firms. It is the global financial market for short-term borrowing and lending. It provides short-term liquidity funding and consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods of time, typically up to thirteen months. Money market trades in short-term financial instruments commonly called "paper." This contrasts with the capital market for longer-term funding, which is supplied by bonds and equity.
Equity finance is a way of raising share capital from external investors in return for handing over a share of the business. This may take many forms, including a share of future profits, but is most frequently associated with sharing the ownership of the business to some degree. The two main providers of equity finance for private businesses are venture capitalists - also known as private equity firms - and business angels.
A stock market (stocks) is widely relied on for the purpose of funds required by the Entrepreneurs. Equity market or stock market is a private or public market for the trading of company stock and derivatives of company stock at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.
Another reliable and helpful source is investing from an Open market, that are the means of implementing monetary policy by which a central bank controls its national money supply by buying and selling government securities, or other financial instruments. Monetary targets, such as interest rates or exchange rates, are used to guide this implementation. An open Marekt in the local terminology also means collecting funds from people around and paying them an agreed rate of interest.
Business cash advance is based on the business’ future sales and the business cash advance provider bears the bulk of the risk in the transaction and thus demands a fee for doing this. In order for the provider to make sure that they maintain cash flow, they have certain criteria in order for a business to qualify for a cash advance loan. While the requirements for a merchant cash advance are not as stringent as those for a bank loan, some providers may require additional, specific qualifications but the existing Business firms donot face much of problems as the provider only recoups its costs if the established business is able to remain functioning and profitable, so it needs to evaluate whether or not buying your future sales will pay off.
With so many convenient options, the Established Business can invest and reinvest and that’s the key to development. With both private and Government initiatives, the sources of funding with time are proving to be much convenient and beneficial while the other party who provides money enjoys a good income too. These days the Established Business firms actually don’t have to worry about funds, while they have so many options, they just need to choose the best option.