Raising Finance - 1286 Words

introduction to raising finance When a company is growing rapidly, for example when contemplating investment in capital equipment or an acquisition, its current financial resources may be inadequate. Few growing companies are able to finance their expansion plans from cash flow alone. They will therefore need to consider raising finance from other external sources. In addition, managers who are looking to buy-in to a business (management buy-in or MBI) or buy-out (management buy-out or MBO) a business from its owners, may not have the resources to acquire the company. They will need to raise finance to achieve their objectives. There are a number of potential sources of finance to meet the needs of a growing business or to finance†¦show more content†¦Replacement capital brings in an institution in place of one of the original shareholders of a business who wishes to realise their personal equity before the other shareholders. There are over 100 different venture capital funds in the UK and some have geographical or industry preferences. There are also certain large industrial companies which have funds available to invest in growing businesses and this corporate venturing is an additional source of equity finance. Grants and Soft Loans Government, local authorities, local development agencies and the European Union are the major sources of grants and soft loans. Grants are normally made to facilitate the purchase of assets and either the generation of jobs or the training of employees. Soft loans are normally subsidised by a third party so that the terms of interest and security levels are less than the market rate. There are over 350 initiatives from the Department of Trade and Industry alone so it is a matter of identifying which sources will be appropriate in each case. Invoice Discounting and Invoice Factoring Finance can be raised against debts due from customers via invoice discounting or invoice factoring, thus improving cash flow. Debtors are used as the prime security for the lender and the borrower may obtain up to about 80 per cent of approved debts. In addition, a number of these sources of finance will now lend against stockShow MoreRelatedExplain what sources of finance are available for small to medium sized companies and explain why they sometimes face difficulties in raising finance2345 Words   |  10 Pagesï » ¿Explain what sources of finance are available for small to medium sized companies and explain why they sometimes face difficulties in raising finance 1. Introduction The SME (Small and medium enterprise) sector is one of the crucial important contributor to economic growth in terms of Gross Domestic Product(GDP) and job creation worldwide(IFC,2010). According to OECD(2006), SMEs had created more than sixty percent of the job opportunities for OECD countries. That situation for developing countiesRead MoreExplain what sources of finance are available for small to medium sized companies and explain why they sometimes face difficulties in raising finance2495 Words   |  10 PagesDifferent stages in raising finance 4 1.2 Venture Capital: a light of hope for the SMEs 5 1.3 Leasing and Factoring: special survival skills 7 2 Difficulties for SMEs in raising finance 8 2.1 Biggest trouble: lack of credit records 8 2.2 Capital constraints 9 2.3 Other barriers 10 3 Conclusion 10 Reference 11 Explain what sources of finance are available for small to medium sized companies and explain why they sometimes face difficulties in raising finance Abstract: ThisRead MoreThe Importance Of Raising Companies Finance For Their Operations Efficiently Without Affecting Its Profitability1486 Words   |  6 Pages1.0 INTRODUCTION The purpose of this essay is to explain and understand the process of raising companies finance for their operations efficiently without affecting its profitability. Equity markets are places where willing buyers and sellers can meet for the purpose of making profit. Market efficiency is the high expectations of investors in every market place. Market places are where investors buy and sell companies and government securities. The information they get from the market efficiencyRead MoreThe Importance Of Raising Capital For The Expansion Of Fleek At Yours1394 Words   |  6 Pagesevaluate the different methods of raising capital for the expansion of Fleek At Yours. The intent is for Fleek At Yours to purchase a car, which will enable the company to reach clients across more locations, and increase its client base, leading to an increase in profit. In addition, the expansion will require finance for the purchase of new equipment, this will enable the business to increase customer sat isfaction, and further lead to a rise in profit. 2. Methods of raising capital There are a varietyRead MoreThe Key Role Of Finance1408 Words   |  6 PagesThe key role of finance in any business is to manage money; whether it be raising capital through share capital and bank loans, raising credit (short-term capital), or handling the costs of the business. Without finance, a business would not function, as quoted by (Griffin, 2015); ‘Money is the lifeblood of a business and finance is the nerve center’. Key activities of the finance department: Firstly, one of the key activities of the finance department is to maintain a check on the costs/outgoingsRead MoreCost Of Capital And Capital Essay962 Words   |  4 Pages!!!What Is Cost Of Capital? How much will it cost and what will I get from it? These questions often arise about most things in life. Investments are no different, the __cost of capital__ refers to the debt or equity it will cost to finance an investment. Cost of capital always depends on the method of financing used. An investment can either be solely financed through equity or debt; mostly it is a combination of both. There are many sources of capital, such as common stock, bonds, long-term debtRead MoreAdvantages And Disadvantages Of Equity Finance Essay721 Words   |  3 PagesEquity finance Advantages and disadvantages of equity finance Equity finance can sometimes be more appropriate than other sources of finance, eg bank loans, but it can place different demands on the Company and its business.. The main advantages of equity finance are: 1. The funding is committed to our business and our intended projects. Investors only realise their investment if the business is doing well, eg through stock market flotation or a sale to new investors. 2. We will not have to keepRead MoreHow Happy Scrappy Is A Personalised Scrapbook Creation Company1638 Words   |  7 Pagesemploying more staff. This would require raising capital to fund the expansion. This report will investigate different methods relevant to Happy Scrappy to see which option are best suited. 2. Sources of finance There are several methods that can be used to raise finance. The method a business chooses depends on factors of the business; amount of capital required, the purpose, the financial position of the business and many more. All of the methods to raise these finances fall under two main categories.Read MoreDeveloping Process Of A Business Plan And Entrepreneurial Finance953 Words   |  4 Pages8 trillion (FSB.org, 2015). Thus, it is of vital importance to understand how to formulate and operate an SME. This reflective essay, therefore, mainly focuses on two topics of SMEs: the developing process of a business plan and entrepreneurial finance, which is a key aspect for SMEs to operate successfully. Personal experiences and group behavior are blended into theoretical approaches to critically evaluate various financial aspects. Christopher Johns’ Model of Reflection is adopted in financialRead MoreBusiness Management : The Financial Manager Essay1277 Words   |  6 Pages2) Investment Decision: The financial manager is supposed to be able to decide between the most profitable investment portfolio that will reduce to exposure minimum the risk of finance and ensure maximum return to the enterprise owner(s). 3) Dividend Policy: The financial manager is responsible for deciding the dividend policy of the enterprise. In a small scale enterprise, the responsibility of the financial manager would include that of determining how to allocate the profit from the to the various