M4; Why Do Budgets and Costs Need to Be Controlled

In: Business and Management

Submitted By queen2234
Words 2853
Pages 12
Dina’s Silk Flowers
Different sources of finance is;
Banks: Banks can offer you loans, but you will have interest when you pay it back, and you will need to show proof that it is you and credit records so they know that you will pay them back on time.
Advantages of a Bank Loan: * Convenient and accessible- Banks are always accessible since they are used regularly for depositing savings or withdrawing them. After being bank customers for years, the bank becomes convenient and familiar, and personalized service makes it the first place to consider for a loan. * Multiple Loan options- All banks advertise various types of schemes to woo entrepreneurs setting up or running a business. The real earnings for a bank come from the interest they charge on these loans. Options like term loans, standard business loans and others are available for the entrepreneur. * Non profit sharing- Venture capitalists and angel investors agree to provide a loan in exchange for part ownership, the right to influence decision making and a share of the profits. Banks do not ask for any of these. If they do sanction a loan, they are only interested in getting their interest and partial loan payment instalments. * Lower rates of interest-Though tough to get, banks provide loans at lower rates of interest than other lending agencies and instruments like credit cards. * Bank loans offer tax benefits- Small businesses taking loans from banks enjoy some relief from tax, since the percentage of profits used to repay the loan is exempted from tax.

Disadvantages of a Bank Loan: * Lengthy application process- banks need to verify all the credentials and details about the business before sanctioning a loan. Therefore its application process is very long and its review etc. takes a long time. * Cumbersome- The prospect of getting into the detailing that banks require is…...

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