5.1.1—Need for finance

Businesses need finance for start-up assets, working capital, expansion, emergencies and investment. The amount, timing and purpose determine which source is suitable.

A profitable firm can still fail if cash arrives after bills are due. Finance decisions therefore connect investment, liquidity, risk, control and cost.

A retailer may need a loan for equipment but enough working capital to pay wages and suppliers before customers pay.

“Need for finance” is not only about growth; routine operations can create a funding gap.