Raising Long Term Finance

Firms can raise long term financing from various sources. They can issue shares, debentures, and other long term bonds in the capital market.

Long term financing provides funds to capital deficit businesses for a period that is over 1 year. Short term financing, on the other hand, offers funds for a period that is less than 1 year. For both new businesses and established corporations, it is common that they have some kind of debt throughout their existence. Hence, raising long term finance is important for all kinds of businesses.

Long term financing can provide funds for various requirements like large capital equipment, fixed assets, expansion of business and facilities, and large scale construction projects.

Firms can also raise long term finance from borrowed capital. They may borrow such capital from institutions or individuals, a practice that includes issuing debentures. The various debentures that the company issues in order to collect long term finance include debentures to bearer, redeemable and irredeemable debentures, and hardcore debentures.

Other sources of long term financing for a business are term loans, equity capital, debentures, preference capitals, and internal accruals.

Various types of long term finance products include:

Convertible notes
Secured and unsecured notes
Fixed deposit loans
Interest rates swaps
Interest only futures
Forward rate agreements
Option on future contracts
Subordinated debt
Convertible notes
Preference shares


More Information Related to Finance Theory
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Public Finance Mortgage Loan Discount
Long Terms Financing Yield Curve Arbitrage
Finance Services Company Arbitrage Pricing Credit Derivative
Binomial Options Pricing Model Capital Asset Pricing Model Cox Ingersoll Ross Model
Black Model Black Scholes Model Chen Model
Liquidity Risk Commodity Risk Consumer Credit Risk
Systemic Risk Currency Risk Market Risk
Interest Rate Risk Settlement Risk Equity Risk
Gordon Model Monte Carlo Option Model Ho Lee Model
Rendleman Bartter Model Vasicek Model Hull White Model
Rational Choice Theory Modern Portfolio Theory Cumulative Prospect Theory
Efficient Market Hypothesis Arrow Debreu Model International Fisher Effect
Floating Currency Financial Risk Management Hyperbolic Discounting
Personal Budget Floating Exchange Rate Discount Rate

Last Updated on : 1st July 2013

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