Page 2: The need for funds
Businesses sometimes need funds above the income they get from trading to help them grow and also to carry out their day-to-day trading activities. Business acquire funds from several sources:
- shareholder capital - where investors give the company money in exchange for shares (long-term)
- loan capital (medium-term)
- bank overdrafts and trade credit (short-term).
This study concentrates on longer-term funds. Without long-term funds, businesses would struggle to buy expensive capital equipment, build new premises, expand into foreign markets, or acquire other businesses.