Evaluation of financial sources

As discussed, the business organizations can finance their financial requirements from various sources of finance. Each of these sources should be carefully evaluated before selecting as the source of finance.
Bank loans
Bank loans are a formal type of sources of funding. The bank may impose certain terms and conditions on the borrower to make sure that the loan is repaid promptly. Bank loans can be obtained comparatively at low rates. The bank will charge different interest rates from different borrowers considering their financial stability, nature of the business and other factors that the bank may consider important. In certain instances, the bank will grant loans on less condition considering the economic priorities of the country. Accordingly, bank loans are considered as a reliable source of finance.
Selling properties/renting out/pawning
A business organization can use its own properties to fund different requirements. If there are excess or unutilized assets, the company can sell them out or rent/ lease them out and fund the requirements. This method of financing enables the organization to meet the financial requirements at low cost and comparatively
easily since the company uses some existing assets.
Personal loans
This is one of the informal methods of financing. Although personal loans are subject to higher interest rates, the ability to obtain loans with less documentation requirements and with no guarantors, these loans are
comparatively an attractive method of financing.