Sources of financing for business

One way to ensure business is financing.It will realized that a project for the development and establishment, depends on whether it is found in the funds.

Financing sources are divided into two groups: internal and external.By first understanding the cash flow derived from business activities, that is, from the company's own capital.The composition of these material assets included:

  1. authorized (formed at the expense of own funds of the founders of the enterprise in its organization);
  2. extension (formed after the revaluation of fixed assets);
  3. capital reserve (created as a result of permanent deductions from the profit of the enterprise for contingencies).

Proceeds from the sale of goods or property, services, profits derived from the sale of shares of the company, receiving payment for the lease of equipment or real estate - all domestic sources of financing.However, investing in the long-term projects can afford only big companies have sufficient available funds.

financing, which uses its ow

n funds, has a number of advantages:

  • increase financial stability;
  • stable formation and rational use of own funds;
  • no difficulties in decision-making, as known in advance to the sources from which will be covered by additional costs;
  • costs of external financing are reduced to a minimum.

External sources of financing divided by debt and gratuitous.Gratuitous - a charitable aid, subsidies, grants, donations, etc., and the debt - borrowing.

The composition of the latter include:

  1. payables;
  2. short-term borrowings;
  3. long-term borrowings.

External sources include government funding, as well as funds received from financial and credit companies, financial organizations or citizens.The search for such material infusion into the business can be carried out in different directions.If the company is developing new technologies, he will approach venture funding.Sources of funding of this type allow a greater risk by investing, based on the receipt of high income.Venture investor gives money in exchange for a stake in the business, and constantly monitors the way the project is being implemented, which it has financed.Often the decision specifies the conditions for venture capitalist management decisions.

can use bank loans or advances granted to credit cooperative.Such cooperatives are organized by individuals and can produce the amount of several hundred thousand.They impose more lenient requirements for the borrower, as well as faster considering applications filed, but the percentage of the loan are much higher.Find an investor for business can help government agencies such as the business incubator or technology park.They create the conditions for the success of start-up entrepreneurs.

choosing sources of funding necessary to maintain the financial balance between the lure of money and preserving the independence and stability of the enterprise.Since excessive reliance on external borrowings could undermine the financial stability of the company and the use of internal resources only slow down the development.The correct calculation of fiscal balance will allow to increase the amount of debt and at the same time rationally spend their own accumulated funds.