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What are the various Sources for Project Funding?

There is a wide variety of project funding sources available for projects or programs which depend on the nature of the company. These sources have great implications on project s overall cost, cash flow, liability and claims to project assets and incomes. The main sources include loans, equity, debt, investors, and government grants.

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What are the various Sources for Project Funding?

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  1. What are the various Sources for Project Funding? There are a wide variety of project funding sources available for projects or programs which depends on the nature of the company. These sources have great implication on project s overall cost, cash flow, liability and claims to project assets and incomes. The main sources include loans, equity, debt, investors and government grants. Overdrafts are ideal for a short-term finance due for repayment in less than a year. The interest payments are tax-deductible and it is only charged when the facility is used. Such funding can be arranged quickly and are flexible in the amount borrowed at any time. Loans are less flexible and it generally has higher rates of interest. The interest payment is also tax deductible and return on the loan can exceed the interest payments.

  2. Debenture loans are secured by a fixed or a floating charge against an organization’s assets. The debenture holders receive their interest payment before the shareholders receive their dividend payment and if the business fails, the holders are liable as preferential creditors. Business Angels are private investors who invest directly in a company in exchange for a place on board or an equity stake. They may invest in a company for a capital gain. Business Angels can be a source of useful knowledge for the business and they have a vast experience in the industry they operate in. Venture capitalists exchange their capital for an equity share or a position at a strategic level often through a non-executive position on the board. Their prime aim is to increase the value of their shares so that they may sell those for a profit. The shareholders receive a share of the profits through a dividend. This share of profit is derived from preference shares or ordinary shares. They may also receive a capital gain that is expected from selling the shares in future and it is the company shareholders who raise the Share Capital. Original Source: https://bit.ly/2Z6gsVg

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