1. SOURCES OF FINANCE

2. Financing, the sources of
finance can be classified into
three. They are;
1. Security financing or External financing
2. Internal financing and
3. Loan financing

3. 1. Security financing
a) Ownership securities or capital stock
b) Creditor ship securities or debt capital

4. a) Ownership securities
Kinds of ownership securities
i. Equity shares
ii. Deferred shares
iii. Sweat equity shares
iv. Preference shares
• cumulative preference shares
• Non-cumulative preference shares
• Redeemable preference shares
• Irredeemable preference shares
• Participating preference shares
• Non-participating preference shares
• Convertible preference shares
• Non-convertible preference shares

5. b) Creditor ship securities
•Debentures or Bonds
Types of debentures;
1) Simple, Naked or unsecured debentures
2) Secured or Mortgaged debentures
3) Bearer debentures
4) Registered debentures
5) Redeemable debentures
6) Irredeemable debentures
7) Convertible debentures
8) Zero interest Bonds/ debentures

6. 9) Zero coupon bonds
10) First debentures and second debentures
11)Guaranteed debentures

7. 2. Internal Financing
1. Depreciation as a source of finance
2. Retained Earnings or ploughing back of profit

8. 3. Loan Financing
I. Short term loans and credits
II. Term loans including medium and long term
loans

9. A .Short term loans and credits
•Indigenous banker
•Trade credit
•Installment credit
•Advances
•Accounts receivable credit or factorings
•Accrued expenses or outstanding expenses
•Deferred incomes or Income received in
advance
•Commercial paper
•Commercial bank
•Public deposits

10. B . Term loans
•Specialized financial institutional bank
IDBI, Exim Bank, Industrial financial
corporation of India, SIDBI, SFC’s, State
industrial development corporations, LIC, GIC,
UTI, Infrastructure Finance company Ltd etc
•Term financing by commercial banks

11. Some other innovative sources of finance
1. Venture capital
2. Seed capital
3. Bridge finance
4. Lease financing
5. Euro-issues