Borrowed Funds:

1. Debentures and Bonds: In the words of Palmer, “Debenture signifies an instrument under seal evidencing a debt, the essence of it being the admission of indebtedness”.

2. Loans from financial institutions: In India, there are many specilaised financial institutions providing finance to business enterprises. Some of those specilaised financial institutions are the industrial Finance Corporation of India.

3. Loans from commercial Bank: Finance from commercial banks is a dependable source. Banks provide timely assistance, as funds are provided as and when needed by the borrowing firms.

4. Public Deposits: Public deposits refer to deposits that are raised by a business firm directly from the public.

Merits of public Deposits: 

• These deposits take care of short-term and medium-term financial requirements. 
• These deposits do not involve the creation of any charge on any asset of the borrower.

Demerits of public Deposits: 

• Collection of deposits from a large number of depositors is somewhat difficult.
• New companies generally find it difficult to borrow funds through public deposits.

5. Trade Credit: Trade credit refers to credit obtained from the suppliers of goods in the normal course of trade. In other words, it means the goods purchased from suppliers on credit. The duration of trade credit is, usually, 15 days to 90 days. It is granted without and security except the credit standing of the concern. The amount of trade credit that can be enjoyed by concern depends upon its credit-standing and the volume of business it carries on the supplier of goods.

There are three types of trade credit. They are:

1. Open accounts or accounts payable 

2. Notes payable 

3. Trade acceptances.

6. Bank Credit: Bank credit refers to credit, financial accommodation or advance taken from commercial banks. Bank credit is, generally, given for a period not exceeding one year. Bank credit is common to all types of business. The amount of bank credit depends upon the nature and size of the business, and the credit-standing of the concern. Bank credit may be unsecured or against guarantee or against hypothecation, pledge or mortgage of assets. An interest of 15% to 18% is, usually, charged on bank credit.

Bunk credit takes various forms. They are:

1. Short-term loan 

2. Overdraft 

3. Cash credit 

4. Discounting of bills of exchange 

5. Commercial letter of credit.