Types Of Financing
Currently, in the business market, there are several types of financing that are designed to meet the needs of companies that are beginning to establish or wish to expand, but they need sufficient funds to implement innovative strategies that allow the company to be more efficient and profitable.
Among the types of financing can be found Interns where companies have profits and can have part of them to reinvest them in increasing the company’s productivity. Also in this type of financing are the contributions that can be granted by the partners of the organization when issuing shares.
On the other hand, external financing that is monetary resources from short, medium or long-term credit loans. According to the type of business, you should choose the one that best suits the requirements of the organization.
What are the types of financing?
These are contributions from the personal assets of the owner of the company, which includes credit cards. This is one of the most frequent forms of financing.
When organizations need money to expand and refinance, this type of loan is very common. This form of loan is repaid over a period of time depending on the life cycle of the asset class that is purchased.
It is another type of financing that in many cases offer rewards programs outside the credit limits and do not charge an annual fee. When there is a cash flow crisis in an organization, credit cards are a great strategy to meet acquired commitments.
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Factoring or Factoring
It is a financing option in small and medium enterprises. This strategy consists of a contract, in the transfer of its accounts receivable in the future, to a Factoring company who will deliver 90% of the amount of the invoice receivable immediately. When the invoice collection date arrives, the Factoring company will directly charge the debtor and its profit will be the remaining 10% that was stopped paying the company that issued the invoice.
They are investors who grant seed capital to new entrepreneurs, who have been made uphill to get a bank loan. The investment consists of making a contribution to a company in the training stage. And collaborating with its ability in business to support new entrepreneurs; This is why they are called angels.
If you do not have enough capital to acquire a team, the company may consider the lease; It is about paying rent for the use of an asset for a period of time.
There are agreements on leases where the equipment can be purchased at the end of the rental. This form of financing represents tax advantages in the operation of the company. Additionally, it is an opportunity to have updated equipment because. When the lease expires, there is the possibility of changing the equipment for a new one.
They are written certificates where the debtor agrees to pay an amount of money in a given period, including their interests. This type of financing allows the organization to improve its liquidity.
In addition, for the bonds to be valid they must be certified, after a while. They become shares, reach the option to purchase and can be reissued.
It is a very effective type of financing and its payment method is long term. To grant the mortgage, the conditions of the property subject to a mortgage. The amount granted for financing, the amount of interest and the person responsible for the company are established in a contract.