Question

In: Finance

Today, there are a variety of loans that can be obtained for small businesses. In 200...

Today, there are a variety of loans that can be obtained for small businesses. In 200 words or more, please cite some of the sources for small business loans.

Solutions

Expert Solution

Sources of small business loan can be-

A. Trade credit loans- trade credit loans are popular among small organisations and they can be taken for meeting with the working capital needs for the small businesses and they will be helpful for short period of time.

B. factoring and invoice discounting is another source of a small business loan which can be generated out of selling all these assets line into the books of accounts of the small businesses and they will be trying to make those into liquid assets using a special purpose vehicles and using of the factoring so they will be trying to generate finance for themselves using their debt in the books of accounts as factors.

C. Leasing- leasing is another form of a small business loan in which they will be trying to to take the assets as lease and use it in order to generate funds for the business and it will be helpful in the generation of the cash flows

D. Bank loans like there is a special segment of the bank loans which are catering to the smaller businesses and they will be always trying to support the smaller businesses so small business can also cater to the bank loans

E. Small non banking financial companies which are primarily established to loan to these small and medium enterprises and they will be offering loans at liberative rates and even they will be trying to provide loans in high risk situations

F. Internet financing is a new source of generation of the loan in which ideas is floated and then loans are generated on the internet.

(it is to be noted that only source of loans has been included and source of equities has not been included as it was not provided in the question)


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