Finance in a business, is just like a blood in our body. No business can be run without finance. Finance is the different modes of payment like money, cheque and bill of exchange etc. Finance is required for the routine settlement of day to day business transactions. Therefore a handsome amount in a business is very necessary. Other assets of business like building and machinery, even the wages of labor and salary of employees needs finance. If we look at the nature of business finance, it includes all types of capital or funds that is used in a business, this is needed in every kind of business, weather a service or manufacturing business. Other elements such as investments of funds, management of cash and disposal of earnings are also included in it.

The amount required in business varies from one business to another and also depends upon the size and production level of business. If you have more finance in a business, you can then make further strategies and expand your business or launch a new product or branch. The main purpose for which the business finance is required is; for the purchase of assets, all kinds of repair and maintenance purchase of raw material etc. Other indirect expense such as service communication, tax and duties and retirement benefits also depends on the availability of finance.

The main question arises that what are main sources of finance in a business. The sources of finance are divided into different categories due to their nature.  When an owner invests his own money in to a business, it is known as equity or owner finance. If he is not capable of investing all amount of money required he may then borrow a loan or simply find a truth worthy person and admit him in a business as a partner so to invite a more finance in business. I case of joint stock Company the capital is raised by the issuance of share to the general public. A company or individual can also use business reserves as a source of finance is case they need it.

Depending on the nature every source has its advantage and disadvantage. The main advantages of equity funds are; business does not have to pay any kind of interest on it, the owner can introduce its capital without any problem or fulfilling any condition. If owner has its own capital then he has control over his business and all the decisions. There is no burden of repayment. The demerits includes, the owner cannot make very huge investment and sometimes face difficulty in payment of wages, salaries and taxes etc. The main point above all that if the business if totally based on owner equity then it means the business is very risky for business man because in case of loss, he will be the only person to bear all the loss. So always make and plan a suitable combination of owner equity and debt financing. This will be good for a business and management.