Choose one topic from list Essay Example | Topics and Well Written Essays - 1750 words

Choose one topic from list - Essay Example In particular, small businesses in the European Union are characterised with a headcount of only 10-49 employees. Their earnings or balance sheet ranges from â‚ ¬10 million to â‚ ¬49 million. (Europa 2003) On the other hand, in the United States (US), the standards for small businesses set by the Small Business Administration Size Standards Office are rendered more specific. In terms of employment size, small businesses in the mining and manufacturing industries employ less than 500 workers, while those in the wholesale trade industry hire not more than 100 employees. Small enterprises for most retail and services industries in the US post annual receipt of about $6 million. (Small Business Administration 2002) Given the above characteristics, it can be seen that similarities of small businesses generally lie in the small employment size and low volume of sales per year. Small businesses also have limited amount of assets. As such, their capitalisation requirements are not as great and demanding as the financing required by large businesses. Financing for all types of businesses come in several forms. However, sources of funding are classified as either debt or equity. Utilisation of these primary funding sources depends upon the amount of capital required, nature of proposed investment and other terms that materially impact the financial position of businesses. Companies often used debt and equity in combination that would result in the maximisation of the value of the businesses. In order to raise the immediate financing need, owners of small businesses may opt to borrow funds from various sources. The main sources for debt financing include banks and other financial institutions (Lister & Harnish 1995). To defray the day-to-day expenses of their business, small business owners may consider availing of demand loan or utilising lines of credit. Demand loans usually have floating interest rate and are repaid within the year