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Source of capital?

accounting thieory and management accounting

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There are two kinds of sources of capital - informal and formal. Informal consists of local money lenders,friends,family relatives...etc. whereas formal sources include banks. The biggest difference between them is that the if money is not returned to the informal source they can even use wrong methods to extract the money whereas in banks collateral i.e. Property or other documents of assurance are required. If the loan is not settled in the given time the bank either sells or auctions the property to the highest bidder.

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Capital can be sourced from friends and family, who can either give you the money or lend it to you. You can also look into a bank loan, although this might be a problem when you are just starting out. Read on about this from techventures.stanford.edu/index.php?option=com_content&view=article&id=26&Itemid=28.

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