The sources of finance of financing working capital may be four categories. They are-
1. Trade Credit: It is the primary sources
that trade credit make up the important
source for a sum of
the total working capital.
2. Bank Credit: The banks determine
the maximum credit based on the margin requirements of the security. The forms of bank credit are Loan and overdraft arrangement, cash credit, bills purchase and
bills discounted.
3. Non-bank Short Term Borrowing: These types of loan are found from relatives,
friends, head office or project office etc.
4. Long-term Sources: It comprises equity capital and long-term borrowings.