Describe the potential sources of long-term finance available to a sole proprietorship or traditional partnership?

Long-term finance is used to provide assets that are expected to provide economic benefits to the business inthe long-term. There are two potential sources of long-term finance for unincorporated businesses and both can be classified as debt finance.

1. A long-term loan is a suitable form of finance for capital investment in assets that are not acquired for trading purposes but intended to be kept in the business in the long term, such investment in plant and machinery.
2. A mortgage is a long-term loan for purchasing land or premises. Mortgages are usually supplied by financial institutions, such as banks and building societies. Repayment may be in instalments or at the end of the term.