Sources of Long term finance:
(i) Shares:
1. Corporate enterprises generally obtain capital mainly from share capital which is divided into small units called shares.
2. Each share has a nominal value.
(ii) Equity Shares:
1. The fund raised by issuing equity shares is termed as equity share capital.
2. Equity share is the most important source of raising long term capital by a mmpany.
(iii) Preference Shares:
The fund raised by issue of preference shares is called preference share capital. 
(iv) Debentures:
1. Debentures are an important instrument for raising long term debt capital.
2. A company can raise funds through issue of debentures which bear a fixed rate of interest.
(v) Retained Earnings:
Retairied earnings refer to the process of retaining a part of net profit year after year and reinvesting them in the business.
(vi) Public Deposits:
1. Under this method, companies invite public deposits by giving advertisement in the media.
2. It offers deposit schemes for a longer tenure.
(vii) Long Term Loan from Commercial Banks:
Commercial banks are important sources of raising business finance for various purposes as well as for different time periods.
(viii) The Loans from Einancial Institutions:
Central and State Governments have established various financial institutions in India to provide finance to business enterprises for a longer period.

Fixed deposits (FD) enable the investor to invest the money for a specific period. The Fixed deposit can be opened from a minimum period of 7 days to a maximum period of 10 years. The fixed deposit holder can take loan against the fixed deposit receipt. The depositor cannot withdraw the fixed deposits before the maturity date.
Recurring deposit (RD) account is another investment option for those people who earn regular income. This deposit canbe opened for a minimum period of 1 year to a maximum period of 10years. The Recurring deposit holder can take loan against the instalments paid.

The significance of business finance are:
(i) A firm-with adequate business finance can easily start any business venture
(ii) Business finance helps the business organisation to purchase raw materials from the supplier easily to produce goods.
(iii) The business firm can meet financial liabilities like prompt payment of salary and wages, expenses, etc., in time with the help of sound financial support.
(iv) The sound financial support enables the enterprises to meet any unexpected or uncertain risks arising from business environment efficiently.
(v) For example economic slowdown, trade cycles, severe competition, shift in consumer preference, etc.
(v) Sound financial position empowers the enterprise to attract talented man power and introduce latest technology.

Commercial paper (CP) is an unsecured money market instrument in the form of a promissory note. Corporates, Primary Dealers (PD), and All India Financial Institutions are eligible to issue Commercial Paper. It was introduced in India in 1990 under Section 45W of the Reserve Bank of India Act. It is issued by a firm to raise funds for a short period. It can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue.

Mortgage is a type of loan taken from the bank by lodging with the banker title deeds of immovable assets like land and building. Business people raise loans by depositing the title deeds of the properties with the bank.

1. Every company needs working capital.
2. Working capital requirements include purchase of raw materials, payment of salary and wages, incurring operating expenses like telephone bills, carriage inward and outward, electricity charges, premium, stationery, etc.

1. Finance is the life blood of every business.
2. No business enterprises can function without finance.
3. Fixed capital requirements include purchase of plant, machinery, furniture, fixtures, vehicles and so on.

The following are the sources of raising long term finance:
1. Shares
2. Debentures
3. Retained Earnings
4. Public Deposit
5. Long Term Loan from Commercial Banks
6. The Loans from Financial Institutions
The following are the sources of raising short term finance:
1. Loans and Advances
2. Mortgage
3. Bank Overdraft
4. Loans against the Securities
5. Discounting Bills of Exchange
6. Clean Loan
7. Trade Credit Commercial Paper (CP)
8. Pledge
9. Hire Purchase Finance
10. Hypothecation
11. Factoring

(i) A customer transfers the possession of an article with the creditor (banker) and receives loan.
(ii) Till the repayment of loan, the article is under the custody of the borrower.
(iii) If the debtor fails to refund the loan, creditor (banker) will auction the article pledged and adjust the outstanding loan from the sale proceeds.
Example: Jewel loan.

Definition:
"The Finance function is the process of acquiring and utilizing funds by a business" - R.C.Osborn
"Finance is that business activity which is concerned with the acquisition and conservation of Capital Fund in meeting the financial needs and overall objectives of business enterprises" -B.O.Wheeler