the relationship between the form of businessownership and availability of sources of finance

The form of business ownership can significantly impact the availability of sources of finance. Here's a step-by-step breakdown:

1. Sole Proprietorship: This is the simplest form of business ownership where the business is owned and run by a single individual. The main sources of finance for a sole proprietorship are personal savings, loans from friends and family, or small business loans from banks. They may also use credit cards or personal lines of credit. However, raising capital can be challenging as they cannot sell shares of the business.

2. Partnership: In a partnership, two or more people share the ownership of a business. Partners can contribute to the business's capital, making it easier to raise funds than a sole proprietorship. They can also take business loans, use personal savings, or borrow from friends and family. Some partnerships may attract limited partners who contribute capital but do not participate in the day-to-day operations or management of the business.

3. Corporation: A corporation is a legal entity separate from its owners. It can raise funds by selling shares of stock in the business, making it easier to attract investment. Corporations can also raise funds through bonds, bank loans, and retained earnings. However, corporations are more complex and expensive to set up and run than sole proprietorships or partnerships.

4. Limited Liability Company (LLC): An LLC combines elements of partnerships and corporations. Like corporations, LLCs can raise funds through members' contributions, loans, and attracting new members. However, they cannot raise funds by selling stock.

5. Cooperative: A cooperative is a business owned and run by a group of individuals for their mutual benefit. Cooperatives can raise funds through member contributions, selling shares to members, grants, and loans.

In conclusion, the form of business ownership can significantly impact the availability and type of financing options. Corporations generally have the most options for raising funds, followed by partnerships and LLCs, while sole proprietorships may find it more challenging to raise capital.