Sources of funding include credit, venture capital, donations, grants, savings, subsidies, and taxes.
Fundings such as donations, subsidies, and grants that have no direct requirement for return of investment are described as "soft funding" or "crowdfunding".
There are two ways in which the capital can end up at the borrower.
The lender can lend the capital to a financial intermediary against interest.
The research awards committee would meet some time to discuss shortlisted applications. In the former, small firms could pre-sell a product or service to start a business whereas in the latter, backers buys certain amount of shares of a firm in exchange of money.
As for reward-based crowdfunding, project creators would set a funding target and deadline.
Research and development departments of a corporation normally provide commercial research funding.
Whereas, non-commercial research funding is obtained from charities, research councils, or government agencies.
These financial intermediaries then reinvest the money against a higher rate.
The use of financial intermediaries to finance operations is called indirect finance.