Business capital for retail traders is crucial. Without capital, no matter how big a business entity is, it will not be able to carry out its business operations effectively and productively. Recognizing the types and sources of capital will greatly assist business operations in obtaining the needed funding, especially for retail traders.
In general, types of business capital can be divided into two main categories, namely tangible and intangible. The difference between these two types of assets lies in the presence or absence of physical form in the capital. Capital that has a physical form is included in tangible capital, while business capital that does not have a physical form is included in intangible capital.
Tangible Business Capital
Tangible capital is capital or assets that have a physical form. In another sense, tangible capital can be interpreted as a business tool. Examples of assets that fall into this category include liquid funds, business premises, production, and distribution equipment.
Apart from having a physical form, another aspect of tangible business capital is its relatively long service life, generally more than one year. Tangible capital must also play an active role in business operational processes, both in production and distribution processes. Furthermore, tangible assets cannot be treated as investment assets and are not for trading.
Intangible Business Capital
Intangible capital is the opposite of tangible, namely assets that do not have a physical form. Ownership of intangible capital is evidenced by legally binding documents stating the business unit’s ownership of these assets
Crowdfunding is a source of business capital in the form of fundraising from the general public. Usually, fundraising uses a special platform which is then distributed via social media. Recipients of derivative funds are not required to return funds within a certain period of time. But still, have to report on the use of funds and the progress of the business being carried out.
Capital from Banks
Currently, it offers credit schemes with low-interest rates for small businesses and cooperatives that are channeled through conventional banks, both government and private. Entirely channeled business capital comes from business capital assets owned by Banks or Non-Bank Financial Institutions in the form of capital or investment.