Business: In today’s article we are going to develop 10 ways to finance your company, since there are many and very diverse sources of financing that exist in the market.
Hasn’t it ever happened to you that you have had a financing problem. When you want to know what is the best way to finance yourself, you have come across hundreds of possibilities? What about my company? Visit liquidity provider agreement.
Types of financing
There are basically two types of financing of a company according to the origin of origin of said financing. The two types of financing that a company can have are, on the one hand, internal financing, coming from the company’s own resources, and, on the other hand, external financing, whose resources are external to the company.
Each one has its advantages and disadvantages that you can read in the article “financing own resources vs external financing”.
Sometimes this type of financing is usually a basic and sufficient source of financing for companies.
External Financing
When own funds are not sufficient to finance business activities or projects, companies often resort to seeking external sources of resources. These sources of financing can have different origins, they can come from capital issues, contributed by the partners of the company; or external financing instruments, provided by banks or private financing entities.
This source of financing is sometimes advisable due to the speed and agility with which it acts in the procedures required to obtain loans, as well as the lower demands and requirements regarding traditional bank financing in accordance with the security and guarantee of the credits.
Ways to finance your business
Among the very diverse and disparate types of financing of a company. Here we expose the ten sources that we have found most interesting.
Leasing
It consists of a long-term lease contract with an option to buy, in which the company agrees to pay the established entry fee and a periodic amount before becoming the owner of the product, assuming all the derived expenses that it entails (taxes, breakdowns …).
Renting
It is a contract to acquire the machinery or vehicle by paying a monthly amount. During said contract, the company that rents the product is responsible for the maintenance costs.
It consists of the issuance of debt by the company in order for investors to buy it and thus become its creditors. Later, the company must return the money from that loan together with an interest amount imposed by the investor. Who is in charge of analyzing the market situation in terms of interest rates.
Factoring
It is a financial instrument whose purpose is to advance the collection of invoices issued by a company to a client.
Confirming
It is a financial procedure by which a financial entity assumes the management of payments by a company to its suppliers in the event that it cannot meet said payments within the deadlines established by the issuance of the invoice. Guaranteeing trust in the relationship between the company and its suppliers.
Crowdlending
This tool allows companies or individuals to obtain financing for their project through the collaboration of a group of people who invest a monetary amount. In return, investors receive a consideration according to the interest rate paid by the company. The Crowdlending platform will in turn receive a small commission for participating as an intermediary.
Crowdfunding
This tool allows the financing of projects based on the collaborative economy. Collaborators do not receive monetary compensation for their contribution, but rather rewards or privileges once the project is developed.
Stock financing
This means is used by companies that have products in the form of inventory in order to mobilize. Obtain liquidity from the commitment of these products. The company obtains a loan for the value of the inventory that it wishes to mobilize. It must pay the corresponding part of the loan.
Export financing
This financial tool allows the company to acquire in advance the liquidity generated by the unpaid invoices of its exported products or to cover the previous expenses of production of said products. The financial entity is in charge of the collection of these invoices by the debtor company.
Public entities, aid or subsidies
This type of aid is granted by public institutions. They are presented in the form of grants and are processed directly from the public body that offers such aid.
At Bandenia Challenger Bank, we are committed to delivering trade and financing solutions in the best interest of our customers.
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