Need
For Finance or Loan
Finance
id the life blood of any business. In the early stages of
development, the businesses ere small. The methods of production
were simple. The financing of business did not pose any
problem to the entrepreneur as it was labor intensive. As
time passed on, the business began to grow both in size
and in methods of production. The use of expensive machinery,
round about methods of production, the employment of large
number of workers, the bulk purchase of raw material, the
marketing of goods at the national and international level
etc. have made the business now capital intensive. The company
form of organization is being relied upon more now.
The
problem of finance in case of sole proprietorship and partnership
forms of organizations is not of serious concern even today
as these organizations are run on small scale basis and
are financed mostly from their owned capital. Even borrowing
is on personal level and these are personally liable to
repay the loan.
What
is Business Finance or Loan ?
Finance
is the base of business. It required to purchase assets
and for the flow of economic activities. It is infact the
life blood and nerve centre of industrial and commercial
enterprises.
Business
Finance or loan may be defined as the provision of money
at the time when it is needed by a business. Finance or
loan may be defined as that administrative area or set of
administrative functions in an organization which relate
arrangement of cash and credit so that organization may
have the means to carry out the objectives as satisfactorily
as possible. In the light of the defination given above,
business loan is mainly developed around three major objectives.
Firstly,
it is concerned with alternative ways by which adequate
supply of money can be raised.
Secondly,
it deals with the financial aspects of getting land, building,
machinery, payment to workers and other marketing obligations
of business.
Thirdly,
it seeks to make profit from the use of capital which is
an overall objective of an enterprise.
Equity Loan 