Many factors have to be considered before an investor invest their money and many motive have to be considered. Among this factors to be considered are the advice on the best method of issuing the shares, the amount of money that would be raised.

 

This is a variation of the offer for sale. In this case, the investors are invited to submit a price at which they are willing to buy the shares

2. Placing: Shares are sold to the few client in the public. This implies that shares and other security are privately sold to close or to select client from the issuing house or broker.

3. Offer for sale: This is done by involving the subscription of an individual investor from the public, through the issuing houses by means of advertisement in a prospectus. It implies that shares are offered at a fixed price determined by the company director and their financial adviser.

Offer for sale can take two form:

a. Via existing share in a company sold to the issuing houses and later sold to the public

b. Via a new share in the company sold to the issuing house and later sold to the public

4.Direct subscription It is at times called introduction and it is the cheapest method of floating a new share since there are no underwriting cost and relatively small advertisement cost. This option is mainly used by the company. It implies that shares are issued to the general public and issuing houses and broker serves nearly as an intermediary

It is an agreement negotiated with the bank has an individual lender and it may be on short term. The owner of the account is allowed to withdraw form his bank account to his negative account. Overdraft is the commonly used source of short term finance. The loan will include the rate of interest to be charged and the amount of overdraft and length of time for which it would be paid.

The most important of bank overdraft is that it enables bank account to draw.

The agreement is that the borrower agrees to repay the loan and in addition with interest when viewed.

This type of short term finance is used to increase the level of inventory of business and they are referred to as seasonal loan, For most company and individual, bank remain the main source of external finance and overdraft is a permit to overdraw in an account up to a stated limit.

            

1. Simplicity

It can be negotiated and operated simply, no new account is to be opened before the loan is given

2. Flexibility

The borrowing firm has the flexibility to borrow up to a stated limit. Only the amount actually needed are borrowed and the interest is charged to the account every 3 month and it is calculated on a daily basis usually 1% to 5% above the bank base rate according to the degree of risk involved.

3. Interest charged on overdraft is an allowable expenses for tax purpose for the business use but not for personal use. It is treated just like normal expenses in the trading profit and loss account

1. The major draw to an overdraft is that the bank has the right to withdraw the facility at short term notice. It could be a problematic to use overdraft for a project which will take 3 or more years for execution.

Collateral security

2. Another major consideration for the borrower is the issue of security. Bank usually take a personal guarantee of the director or owner of business