: CLASSIC WAYS OF FINANCING GROWTH
Using one's own resources
A traditional way to fund a company's growth is through self-financing. By using one's own internal resources, operating profit or retained earnings, an enterprise can expand at its own pace. This method of financing growth is limited by the wealth of the founders or the profitability of the enterprise. Self-financing is rarely sufficient to finance plans for increasing productivity, entering new markets and remaining competitive.
Borrowing money from banks is another common means of raising funds to expand an enterprise. Bank loans have helped many companies in the past. Unfortunately, this has been the only or main source of financing development and growth in the region. This means of short-term financing is often expensive. It can increase the risk to the enterprise because it establishes fixed payment obligations. No matter the success of the company, it must continue to service its short-term debt. Bank credit terms are not always compatible with the long-term capital requirements of the enterprise.