Different ways in which companies raise the funds

Money is the very important factor to start the business and run it. Companies need fund in each step of its activities. So companies will look for different ways where company can get the money along with that interest or cost of capital need to be taken in consideration.

Share capital : Share capital is the fund that is brought by the owners of the company. In addition to that company can get investors who will invest in companies capital. By issuing equity and preference share capital company can get the funds. Company can bring Ipo and Fpo in market where fund can be raised.

Loans from Banks : To meet the working capital company can get the long and short term loans. But need to pay interest on such loans.

Venture capital : when campany has potential to succeed in future company can contact venture capitalists from them fund can be brought in to the company in the form of equity or debentures.

Debentures : Company can issue the debentures in the market. According to credit worthiness the fund can be raised and interest can be fixed. By issuing debenture company need to pay interest to debenture holders.

Bonds : Company can funds from issuing bonds in market where the company need to pay the interest. But for such bond the assets need to be backed as security.

Previous profit: Using the previous years profit will be great idea for business where paying interest is not required.

Angel investors : By approaching angel investors company can raise the fund. They can invest in equity or debentures according to the safety of the fund they have in business.

Raising fund has many ways but companies need to consider the interest payments need to made on such fund. If interest payments are less it will benifitial for business.