Finance is defined as the provision of money at the time when it is required. Whenever any person starts the business either it is a long term or short term finance plays a very important role for the successful of our business. As blood is necessary for human being similarly finance is required in every business. No enterprise can possible without adequate finance. finance is the pillar of the every business. it is an important factor of the business enterprise. it is the key of the every business.
Modes of finance:
· Security financing· Internal financing
· Loan financing
Loan financing:
Temporary borrowing of a sum of money is known as loan financing. Various loans financing companies in India like: ICICI, HDFC, Swiss, muthoot, or many more. It may be Long term debt financing and short term debt financing.
Short term debt financing:
· Indigenous Bankers
· Trade Credit
· Installment Credit
· Advances
· Accounts Receivable Credit or Factoring
· Accrued Expenses
· Deferred Expenses
· Commercial Paper
· Commercial Banks
· Public Deposits
1. Indigenous Bankers: They are private money lender. They are especially popular in those areas, which lack joint stock banks. They charge a very high rate of interest. But now days, with the development of the commercial bank they lost their monopoly. Because people gives more preference to the commercial bank as compared to indigenous banker because they charge a very high rate of interest.
The popularity of indigenous bankers is mainly due to the following reasons:
· They provide prompt and flexible credit.
· They have cordial relationship with the customers.
· They are also act as their friends and advisers.
The main functions of the indigenous bankers are as follows:
· The indigenous bankers accept deposits from the public. The indigenous bankers pay higher rate of interest than that paid by the commercial banks.
· The indigenous bankers advance loans to their customers against all types of securities such as house, land, crops, gold and silver, etc.