Sources of Finance; Start-up Capital; Internal sources (14)

Sources of Finance

Start-up Capital

The finance needed to meet all the expenditure to start the business is called as start-up capital. A business may meet start-up capital from two main sources;

1.Internal sources
2.External sources

Internal sources

When the firm use its own finance to start the business it is;

1. Retain profits-When the owner use his own money which is called as retain profits.
2. Sale of assets-owner can sell his assets and obtain finance.
3. Family and friends-the owner can obtain finance from his own family members.

Advantages

1. Easy to obtain finance because less documentation.
2. No interest had to be paid.
3. Less Liabilities.

Disadvantages

1. High opportunity cost.
2. Doesn't focus on the success of business.
3. High interference.