4 Main Stakeholders who provide Finance to the Businesses

Lenders provide long-term loans to the business, usually to cover large projects. Each of these stakeholders has its own objectives and rights and responsibilities. But they all share one common goal: to ensure that the business is successful and profitable. The relationship between these stakeholders and the business is beneficial. As they provide the necessary capital for the business to operate and grow while profiting from the returns.

Shareholders

Shareholders are the owners of a limited company. They own a stake in the business through the buy of preferred stocks. These stocks entitle investors to a share of the company’s profits and losses. As well as a share in the ownership of the company. As shareholders, they are entitle to certain rights. Such as the right to vote on company matters and the right to receive dividends.

Shareholders also have the right to inspect the company’s accounts. And also records and receives a copy of any documents that are relevant to their ownership. They also have the right to receive a share of any assets should the company be dissolve or liquidated. Furthermore, shareholders have the right to seek legal action should the company fail to meet its contractual obligations.

A shareholder is a person, company, or institution that owns at least one share of a company’s stock or in a mutual fund. They are entitled to certain rights such as part of the company’s profits and the right to vote on how the company is controlled. – Definepedia

Preferred stock

Preferred stock is a type of investment in a company that combines elements of both stocks and bonds. It gives investors certain rights that are different from regular stocks. Such as a higher payout in dividends and priority access to any dividends or assets the company distributes to shareholders. This type of stock is often issued to investors in exchange for cash, while common stocks are given to the founders and employees of a business. By owning preferred stocks, investors have a proportional share of ownership in the company.

Creditors

Creditors are people or companies that lend money or give credit to businesses. They can be banks, other financial organizations, or even individual investors. Before giving money to a business, creditors make sure the business is able to pay it back. They also keep track of the business paying back the loans. Creditors care a lot about getting their money back because it is a source of income for them. Other groups that are affect by a business include customers, the local community, society, and the government.

Banks and other financial institutions

Banks and other financial institutions like microfinance providers lend money to businesses so they can earn interest on the loan. When the loan is due, the business has to give the borrowed money back. A lot of a business’ money usually comes from bank loans because they need money to run their projects.

Overdraft

An overdraft is when a business takes out more money from its bank account than they have. Banks allow this to happen but only for a certain amount and only if the business is in a good financial situation. The business has to pay interest on the overdrawn amount and pay it back as soon as possible.

Bank Loan

A bank loan is a large amount of money that a business borrows from a bank for long-term projects. Like buying a building or expanding the business. The bank wants to make money from the loan by charging interest, which the business has to pay every month. The loan agreement states how the interest will be paid back and the business has to give the borrowed money back in full at the end of the loan term. Banks want to have a good relationship with the business for future transactions.

Microfinance

Microfinance is a type of lending for people who don’t have access to regular banking services but want to start their own businesses. it gives small amounts of money to people in developing countries, who want to start their own businesses.