Definition of Funding

Definition of Funding

Funding is an act of arranging or providing money, other resources like human and time required to run business operations or Government duties. Funding can also be done for individuals.

There is another common term that is financing. It also means arranging for money to inject in the business and run it. But the difference between both is that in funding you are not compulsory required to repay the borrowed amount and no interest applies.

In financing, however, interest and repayment option both exist on mandatory basis.


Brief Explanation of Funding



There are numerous options available to fund any business. They are discussed below

SELF FUNDING: Using your own available resources and saved money to inject in business. This helps you keep your individual control on the business without sharing the rights and profits.

BORROWING FROM FRIENDS AND FAMILY: In this case, you can allow your close friends and family members to be part of your business. This is a trust worthy transaction both for you and the newly joining member because of the past trust and relationship.

BANK LOANS AND CREDITS: This is done by temporarily taking credit loan from your bank and paying it back before the interest applies. You can frequently use this option. For example, take credit loan to run operations and pay it back as soon as it fall due and then take out another loan. It is all about timing and calculation.

SMALL BUSINESS GRANTS: This is available with banks and other financial institutions. You have to keep security with the loan provider in this case.

 DONARS: Foe example in research and academic institutions the donors fund the scholarships and new research projects.

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