Business Finance Basics

The lifeblood of any business is based on its sources of funding or?finance. Financial institutions including banks, credit card companies, consumer finance companies and stock brokerages offer you different services that may help your company raise venture capital.

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Banks

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Commercial banks are usually referred to as banks which offer you a complete menu of services which includes:

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* safekeeping of the money within an account

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* issuance of checkbooks which assist you to make payments without bringing cash

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* personal mortgage loans, commercial loans and mortgages

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* issuance of credit and debt cards

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* enable financial transactions using Automated Teller Machines (ATM)

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* allow electronic fund transfers

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People deposit money in a bank for safekeeping and later use. The financial institution then lends this money to other individuals or corporations for consumption or investment. It charges interest on the loans and earns profit like that.

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Companies often turn to banks for short-term funding and capital requirements and use ownership equity (company shares) and bonds for long-term funding.

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Private equity

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These funds are provided in exchange for equity or ownership inside the company and can be used to acquire businesses in which they invest.

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Venture capital

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Within the early years of ecommerce, venture capital was a popular source of funding provided by professional outside investors who planned to break into the new and high potential growth dot coms. The goal of a venture capitalist would be to take the company to an IPO or Initial Public Offering or trade sale of the business.

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Angel investment

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A startup company can also obtain funding from an affluent individual generally known as an angel investor who will give necessary capital in return for convertible debt or ownership equity. Private investors might also pool their funds together in what is generally known as an angel network.

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Conglomerate

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This can be a financial services firm with a diversified business covering multiple sector on the finance market that include life insurance coverage, medical health insurance, asset management, and retail banking.

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Other financial services ordinarily used by businesses are intermediation and advisory services of stock brokerages. Stock brokers assist investors in exchanging shares. While the full-services broker provides investment advice to a client and charge higher commissions for such personal service, more discount brokers nowadays add a similar benefit for reduced commissions.

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Whether as owner?s equity or as a loan,?finance services?offer much needed funding to nurture a business.

Source: http://www.ibcynical.com/sisyphus/uncategorized/business-finance-basics/

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