1. A firm with adequate business finance can easily start any business venture.
2. Business finance helps the business organisation to purchase raw materials from the supplier easily to produce goods.
3. 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.

The following are the unethical practices of lending by informal money lenders:
i) Charging very high rate of interest on daily basis.
ii) Collecting back the loans through money and muscle power.
iii) Ill-treating the borrowers to the core, sometimes leading to suicides
iv) Being highly choosy about the borrowers rather than the project financed.

There are two types of shares namely Equity Shares and Preference Shares.
Equity Shares:
Equity share is the most important source of raising long-term capital by a company. These shares do not carry any special or preferential rights in the matter of payment of annual dividend and repayment of capital at the time of winding up. Equity shareholder enjoys more voting rights in proportion to number of shares held by them. They took part in the management of the company.
Preference Shares:
Preference shares are those shares which enjoy priority regarding payment of dividend at a fixed rate out of the net profits of the company. They will get their dividend every year before any dividend is paid to equity shareholders. They will have a right to get their settlement before the claims of equity shareholder are settled at the time of liquidation of company. They do not have voting rights.

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.