BARUCH FUND OF CORPORATE FIN. W/CONNECT
BARUCH FUND OF CORPORATE FIN. W/CONNECT
10th Edition
ISBN: 9781264531820
Author: BREALEY
Publisher: MCG CUSTOM
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Chapter 2, Problem 1QP
Summary Introduction

To discuss: About the financing sources of small private firms and give three examples also.

Expert Solution & Answer
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Explanation of Solution

The small private firms can raise funds through only financial markets for their capital investment. The different sources of finance for a small private firm can be classified in to equity or debt financing.

 Equity financing is a process of selling company stock to investors for raising capital. In which a part of ownership is vested in the hands of shareholders. Debt financing means selling debt instrument to individuals or institutions for working capital or capital expenditure requirements.

Sources of finance for the small business are the following:

  • Own capital
  • Small business loans
  • Trade credit
  • Banks

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