What is external source of fund?

An external source of funds refers to financing obtained from outside an organization or individual, typically to support business operations, investments, or expansion. Common external sources include loans from banks, investments from venture capitalists, issuance of stocks or bonds, and grants from governmental or non-governmental organizations. These funds can provide the necessary capital for growth but may also come with obligations such as repayment or dilution of ownership. Overall, leveraging external funds can enhance financial flexibility and enable strategic initiatives.