The main sources of business financing are the allocation of funds for the discovery of an entrepreneur’s idea. For the development of the company, it will be necessary to attract financing, investments, the sources of obtaining funds are chosen by the entrepreneur, focusing on the methods of obtaining financing. With the development of business, new types of investments have appeared, which are divided into categories.
Contributions of money to entrepreneurship are not only the use of personal funds, but also the attraction of money from outside, the transaction is confirmed by an agreement and sealed with a signature, it is a document that is endowed with legal force.
Deciphering the concept
To open an enterprise, to implement a business plan, investments are required, in the tax code there is a concept of a source of business financing - these are the financial resources that an entrepreneur receives to open a business from external or internal sources.
Money is invested in various business transactions that ensure the development of the enterprise.
Economic practice involves 2 sources of funding:
- Finance attracted from internal sources is a funded system of funds from the profits of the company. The income from doing business has a cumulative system; for the further development of the enterprise, specific funds are used. These are income items: debt, reserve funds, amounts for sold real estate or business income.
- External sources of business financing are finances that the entrepreneur attracts from outside. Investments of this category can be attracted from investors, financial institutions or borrowed. Subject external funding are banks, government agencies, legal entities, .
The source of raising funds is an economic category. Economic instability affects the ability to attract external financing, most business entities are guided by internal reserves. The organization makes deductions provided for by federal law, and the company also has funds that are necessary to pay bills, company expenses, and depreciation.
The profit received from the activities of production is the property of the founder. Income is distributed to business development, part is set aside for reserve capital. Depreciation savings are cash that accumulated during the use of fixed capital. The amount of depreciation funds depends on the direction of the enterprise, its scale.
These savings are used to purchase, replace the intangible components of the labor process.
Internal and external sources have different potential, therefore, it is necessary to attract finance for the development of an enterprise, identifying each concept. Financing a business from external sources is raising funds from outside.
- Commodity loans are forms of commercial lending that involve the transfer of goods from the lender to the borrower by mutual agreement of both parties. A money loan involves loans in foreign currency, a bank loan requires strict adherence to the rules. A financial institution borrows funds for a specific period, while obtaining a loan is payable service, the bank needs a return guarantee, all items are described in the contract.
- Allied companies. If a company has the same problems with allies, then their forces are combined, in this way, they benefit from scale and overall economy.
- Shareholders sell shares, most enterprises consist of tens or hundreds of shareholders.
- State budget financing, organizations receiving funds from structures are state-owned and not an entrepreneur's income.
The type of lending provides for the signing of a mutual agreement, contract, the document confirms the rights and obligations of each party, regulates their relationship.
The need for lending arises in both large and small enterprises, government agencies have programs to ensure the financial security of entrepreneurial work.
The source of the loan is the stock market, business entity, state, owners, employees of the enterprise. Those loans that relate to external sources of project financing have wide range choice and flexible programs.
Receiving financial support is a help to the enterprise at the stages of development. The owner chooses the types of business financing independently, focusing on manufacturing process. Every entrepreneur has the right to receive funds.
Federal legislation determines the types of financing, after a comparative analysis, choose the best option:
- lending;
- leasing financing;
- trade loans;
- state subsidy.
Economic activity involves attracting investments. To maintain the right to full ownership of the enterprise, the owners attract funds from state programs.
Financial institutions offer credit transactions, the conditions are stipulated by the contract. Short-term liabilities loans are in first place in the ranking of sources of raising finance.
Bank loans are used to pay off costs from the industrial sector, agriculture, to pay off mortgages.
Financing through a bank has advantages and disadvantages:
- The speed of receiving funds, many banks provide services within a few hours or days, depends on the amount of the loan. The entrepreneur independently distributes the money, without the controlling party, the investor.
- The negative side is the short maturity of the debt up to 3 years. According to the loan program, the bank imposes interest on the amount taken, insurance premiums are valid. Depending on the loan, claims from the bank are acceptable.
Leasing program
Business development is impossible without attracting investments, if the owner wants to reach a new level, then he will need internal or external sources of business financing. Leasing - the possibility of obtaining funds from the main fund, the opportunity is presented to the entrepreneur, subject to subsequent redemption. The subject of leasing is not only cash. These are: land, transport, real estate, movable property, technology.
The program has the following general characteristics:
- The program does not require the submission of collateral, such as a rented product, real estate. General terms leasing is acceptable in relation to a loan from a bank, the payment of the entrepreneur is related to the specifics of the company's activities.
- The negative point is the payment of the down payment, depending on the scale of the purchase, the amount reaches up to 30% of the price of the property.
- If the owner of the organization has a simplified taxation system, then he should clarify the conditions for obtaining a loan with the leasing company. Tax is charged on the amount of such loans.
You can take money from funds for support strictly following the established rules. Depending on the specifics of the enterprise, a leasing company is chosen.
trade loan
When opening an enterprise, the owner enters into agreements with suppliers and other firms. Interaction with companies allows you to buy goods, products in installments or with a deferred principal payment. This method is acceptable for entrepreneurs who are engaged in the sale of goods not own production. The owner buys a batch, and the calculation is made after its sale.
Situation on economic market involves funding. An entrepreneur starting to work is counting on benefits from the state. To implement the business plan, a subsidy is allocated - a one-time payment from state financial institutions, regional authorities, international charities, funds. The money repays part of the expenses for opening an institution, repayment of contributions.
Federal legislation regulates the legal procedure for opening individual entrepreneurship regarding the taxation system.
Cancellation of the tax deduction or tax holiday is received by individual entrepreneurs:
- registering a business for the first time;
- chose a simplified taxation system, a patent;
- the enterprise is involved in the scientific, social, and production spheres.
Benefits apply for 2 years, with the development and operation of a private enterprise. Allows you to save money and invest in the future.
Loans are taken on a repayment basis, the source of raising funds for business development complies with the established lending program with repayment of interest on the loan.
Positive and negative aspects of internal and external sources of financing
The source of funding has different directions, receiving grants for starting a business is gaining popularity. International charitable companies offer fixation interesting ideas from young entrepreneurs.
An attractive source for business development is a grant - this is a gratuitous targeted subsidy.
This type of investment is positive sides in order to receive funds, it is necessary to draw up a project correctly and interest the organization.
After analyzing the financing of a business, they identify sources that have positive and negative sides. Every year there are government programs to stimulate and develop small businesses, subsidies are valid in the long term. Each type of fundraising has its pros and cons.
Internal sources of financing have the following characteristics:
- The positive side of attracting domestic investment in a simple scheme for obtaining funds, while not requiring the permission of outside individuals or legal entities.
- Missing additional payments on interest, there is lending.
- The negative point is the limitation in the amount of funds, the inability to receive an increase in funds.
External sources have the following nuances:
- A positive factor is unlimited funds, growth of the organization's potential, development and growth of the company. Increasing profits after financing, a jump in business profitability.
- Credit obligations are the risk of bankruptcy, repayment of interest, payment of contributions reduces the final profit.
- Regardless of possible difficulties, the entrepreneur is obliged to fulfill the conditions established by the financial institution, prescribed in the contract.
An individual entrepreneur independently chooses a way to develop an enterprise, taking into account the pros and cons of financing.
The attracted investments act as a source of financing, the owner of the company independently chooses an acceptable option. Types are established by law, have a positive and negative side, before using auxiliary means, an analysis of the economic market will be required.
Providing a business with additional cash is called financing. After you have decided on the direction of your own business, you need to find out the issues of financing. For the successful development of a business, you must be able to find funds, since it is the lack of free finance that is the first reason for the failure of activities.
Don't hope that cash investments required only in the initial stages of the development of the case. Throughout the activity, you must carefully monitor all monetary transactions and correctly assess their usefulness and validity. If you have additional investments, you will be able to transfer difficult periods of activity without loss.
Own business valuation
First you need to find out how much money you need for successful development. To do this, you need to draw up a business plan. In the process of activity, you must constantly make changes to it based on the experience gained.
You also need to calculate the number of possible sales for a certain period. In addition, the costs necessary for the production of products are calculated. Based on the data received, you can calculate the preliminary amount of daily and monthly profits. Only then will you be able to understand how much you need.
It should be noted that, as a rule, the planned losses eventually double, and the time for production increases. On average, only after four years you will be able to receive a net profit from your business.
Having decided on the amount of cash investments, you can proceed to the choice of their income. There are external and internal sources of funds.
Domestic funding sources
Internal sources of financing include funds that are generated in the course of activities. This includes income from the sale of goods, the sale of property, etc. The entire gross profit from the activity is divided into residual income and cost recovery.
Residual income is the amount that remains in the enterprise after paying all taxes and payments (except for reimbursement of costs). It can be used for any purpose, including business development. Dividends and bonuses are also paid out of this amount. Cost recovery is the distribution of funds in certain areas.
Also, internal sources of financing for one's own business include investments in authorized capital, proceeds from the sale of shares and shares, as well as payments for the lease of buildings or other property.
External funding sources
External sources of financing can be divided into debt and grant financing. Various subsidies, charitable donations and assistance are classified as grant funding.
Debt financing is divided into:
1. Short-term credits and loans.
2. Long-term credits and loans.
3. Accounts payable.
Other sources of funding include:
- Credits and loans. This is the most common way to raise money. The only negative can be called the fact that in the event of a difficult economic situation, banks stop issuing loans and tighten the terms of loans.
- If there is a lack of funds, barter can be used. Wherein finished products exchanged for the necessary raw materials. This allows you to hold out for a certain period.
- Issue (release) of shares. At the same time, additional funds appear, but at the same time, control over the business is distributed among the holders of controlling stakes.
- Issue of bonds and bills. In this case, several creditors are formed.
- Leasing is very common today. In this case, not cash, but assets are taken on credit. Thus, it is possible to expand the fund of equipment and achieve an increase in income.
- If you plan to expand your operations, you can use project financing. In this case, the loan is issued for the implementation of specific plans.
- The state also provides financial support to businesses. It can be provided in the form of targeted loans, subsidies, tax incentives and subsidies.
Specially for
Business financing- is supply money (financial resources) or the allocation of money (financial resources) for something.
In cases where financing is aimed at making a profit from this supply (allocation), it turns into investment(or investment financing). Investment financing, as a rule, is aimed at supporting the image, rating, and profitability of the company. At its core, the investment type of financing is designed to attract another type - trade finance, that is, direct support of the firm's capital.
In a broader sense of this concept, the following can be distinguished: types of financing:
- paid (compensated) - credits, loans, leases, loans;
- free (gratuitous) - gift, donation, subsidy, grant, subsidy, etc.
Types of funding sources.
All sources of financing in business can be divided into external and internal.
Internal source refers to the personal property of the company. First, this profit, that is, the difference between the company's income and the cost of goods or costs. Distinguish gross profit(i.e. total profit, excluding taxes) and residual profit(i.e. the net profit remaining after all expenses have been deducted). Secondly, it is a reasonable distribution of stocks. Timely purchased or sold goods allow you to extract additional profit.
There are many external sources of funding:
- other companies (an element of partnership is one of the main ones in business);
- shares (the sale of shares allows you to attract financial resources outside the company);
- banks (loans are the most popular sources of financing);
- commodity loans (or trade loans - a type of loan that is given not by a bank, but by another company in the form of a product);
- state ( budget financing or government order).
The heads and heads of the financial structures of today's domestic enterprises show a serious interest in the selection and search for ways and means to finance their business.
Banks and stock markets provide an opportunity to consider various proposals on this issue, explaining their features, correlating them with changes in the money market.
We suggest you consider the standard and most effective methods obtaining capital for business development.
The source of obtaining finance for a businessman can be classified as both external and internal.
The first category includes those assets, monetary units that the organization receives "from the outside", from companies from which the business is not directly curled, for example, a bank, depositors, investments. Which tool to use and direct is determined according to several main points:
- Price
- Passive, exactly its type
- Necessity and time
Sources from outside
This type is divided into equity and debt. In the first case, the firm uses its own funds, in the second - takes a loan. Investors believe that the last financing instrument is more profitable, since the cost of such an instrument already includes a small insurance amount, “at risk”. Business owners also see their benefits in this type of financing, in this situation there is no need to allocate funds for the lender in the organization.
The disadvantage of such an instrument is that it makes the company dependent on situations in the economic market; during a recession, for example, the organization may not be able to repay the loan.
Debt financing, types
- syndicated loan
This form is used if one bank is unable to issue the requested amount of funds. Then the creditors form an association, and certain contractual relationship both within the syndicate and with the recipient of the loan, which determine the algorithm of actions to repay the loan.
According to statistics, our banking organizations rarely use this method as a source of financing; Western companies use it more often.
alternative this method bonds can be offered.
- Bonds
Issued big companies to raise additional funds. Such papers can be freely available, they can be easily purchased and sold. Sustainable enterprises that are able to make a forecast of the economic situation issue bonds denominated in foreign currency.
- Overdraft
In essence, this is a short-term loan. Overdraft is divided into classic, advance, collection. A significant difference from a loan is that it is repaid in full, at the expense of funds debited from the card. Its plus is that no additional documents are needed for its registration, except for your own bank plastic card with the limit available on it. For this type of lending, it is enough that the movement of funds on the card is constant. Minus - high interest rates and a short term for repayment of the loan.
- Leasing
Another form of lending, when the lessor leases for a long period of any type of property with the possibility of either returning or redeeming it. The advantages of leasing are that the profits of enterprises using leasing are less taxed. Leasing enables business owners to update their technical base. If, in a situation with a loan, you will have an agreement that will prescribe clear terms and amounts of payments, then you can always agree with the lessor on conditions that take into account your capabilities. Interest rates on leasing, as a rule, are higher by several percent on a loan, however, despite this, the total benefits from such a type of lending as leasing are greater than from a classic loan.
- Credit based on a rating agency
In this case, the rating agency is the guarantor of the bank and indicates whether the issuer will be able to fulfill all of its obligations. Based on their opinion, lenders and entrepreneurs decide which source of financing is the most profitable, where demand is higher. With a positive assessment of the rating agency, the competitiveness of the enterprise increases.
- secured loan
A secured loan must be secured by some valuable property that will ensure the organization issuing the loan that you will definitely repay the amount of money issued. The property is sold only if the borrower fails to meet its debt obligations. The disadvantages are that such a loan requires more time to process it and is associated with the risk of losing the pledged property. Plus - the interest rate is much lower compared to a classic loan.
State lending
- Direct capital investments. These funds are directed to enterprises located in the public sector. Accordingly, all profits are state-owned.
- Subsidies. Allocation of small amounts, incomplete or partial funding. It covers both private and state companies. The positive feature of this kind of financing is that it is interest-free, free and gratuitous.
- State order. The state acts as a buyer and forms an order for the production of a particular product to a particular company. An example is RZD. The road is state-owned, and what moves along it is created by private organizations. In this case, the state does not spend on production, and the manufacturer receives a profit from sales.
Equity financing, types
Raising funds through shares. Shares are issued by those organizations that have taken place in the market and have stable cash flows. Shares may be offered primary, secondary, partially or in full.
- Venture Capital
Funds used to invest by an external investor through third parties in new, growing businesses, or those that are on the verge of bankruptcy. This type of investment involves high risk, but also income, whose size is defined as "above average". Through venture capital investments, it is also possible to acquire a share in the company's ownership.
- Syndicated investments
A united group of investors (having a romantic name "business angels"), on their own initiative, invests in projects that they consider the most profitable. This method of receiving funds is also associated with the risk of lack of benefits (a business angel invests his own funds), but is practically devoid of bureaucratic delays.
Internal sources
Such funds are formed as a result of the work of the enterprise. This includes: sales revenue, gross margin. This may include:
- Profits that are undistributed
These are the funds that remain with the organization after it has paid all taxes, carried out all monetary transactions with shares. Such money is sent to the company's assets and used for its further development and growth. Such funds may be earmarked for the purchase of securities or simply kept in the cash balance feed.
- Automatic funding
Funds received as a result of an increase in the size of liabilities (growth in debt on a loan), when accruing (but withholding) wages to employees. Such funds are automatically distributed to the needs of the organization. This type is associated with huge risks in the form of an increase in the financial obligations of the company.
- Factoring
It includes three parties: a factor (buyer of claims), a debtor (buyer of goods) and a creditor (supplier). In essence, this is speculation in short-term receivables, usually at a discount of 10 to 60 percent. A type of short-term loan secured by company assets.
- Capital optimization
It implies the creation of certain projects aimed at increasing or decreasing profitability. In this case, as a rule, comprehensive measures are taken that allow free funds to appear that can be reinvested in other areas of the organization's work, aimed at expanding it or creating new projects.
- Discarding a non-core asset
Assets that do not bring monetary benefits, on the contrary, divert funds and attention to themselves. In this case, the best way out is to sell such assets, and the proceeds must be transferred to the direction that the company considers a priority.
- Fund for depreciation
Depreciation - wear production capacity, more precisely, its monetary expression. The amount of money from which the fund is formed, directed to these needs, is included in the cost of production, and accordingly affects the price. The main tools of the enterprise are repaired, replaced or rebuilt from these funds. The required amount of deduction is calculated from the initial price of the asset under which depreciation is calculated. If the equipment needs to be repaired or replaced immediately, then the company can take the accelerated depreciation path. In this case, deductions are made in a larger volume than the normative ones. This method is only recommended big business, since when buying new equipment, volumes increase, the amount of goods produced increases and depreciation is calculated for a larger number of products, and, therefore, there is no price increase.
The development of technology makes more and more people think about own business, as jobs become smaller every day, even specialists and professionals are being replaced by robots. The main questions when starting a business are: the idea and the means to start. How and where you can raise capital is described in this article. When choosing a financing method, it is advisable to contact trusted sources and trusted investors.
In the modern world, a person is constantly surrounded by various kinds of businesses. Most of them are created by the simplest people who have an idea. Its implementation could take a long time. Sometimes worthwhile project quickly turns into a profitable business. An economist once said, “Looking for a business idea? Find in environment something you don't like." This is how dry closets appeared on the streets, cafes with the possibility of taking out an order, and much more.
Business types
With the advent of new technologies and the increase in people's needs for comfort and luxury, the number of types of business is also growing. You can list the areas and directions endlessly, we focus on the main ones:
- auto business;
- tourism and transport;
- wholesale and retail trade;
- repair and construction works;
- Agriculture;
- entertainment and hobbies;
- education;
- beauty and health and others.
Many of them have already partially or completely switched to an online platform. When choosing a direction, one should be guided not only by profitability, but also by personal interest. It is necessary to feel sincere interest in the business, to burn with it and strive to bring the enterprise to a qualitatively new level in terms of profitability and development prospects.
The cost of starting a business depends not only on the direction, but also on the form of entrepreneurship. In a number of situations, only a small amount is enough to register a business, as an office, you can use both your own apartment and a garage, and personal development tools will become mobile devices. This option is especially common among freelancers and people involved in Internet projects.
Company registration fee:
- IP - eight hundred rubles, as well as payment for copying materials;
- LLC - four thousand rubles, in addition to this, a minimum ten thousand of authorized capital is required (data for 2018).
As for the investment in a new enterprise, they can be very different, as they consist of the price of equipment, the rental of premises, if required, the number of personnel who need to issue wages and others. So, how much money you need to open your own business is not an unambiguous question, since it depends on many factors.
Drawing up a business plan for the project
This is one of the key aspects when planning future activities. The drafting of the project begins with the definition of goals and the time frame for their implementation. Next, the calculation of the resources that are required at the initial stage and the payback period is carried out. The last parameter is extremely important when attracting investors. People who are ready to invest their money in someone else's business, first of all, look at the period of time within which they will begin to receive dividends.
When drawing up a business plan, you should be guided by the following rules:
- Timely study the entrepreneurial market, analyze existing companies, potential competitors.
- Determine the advantages of your company, which will allow you to become better than competitors. Project plan should reflect all strengths.
- Refine strengths and weak sides project, as well as ways to overcome shortcomings.
- Write marketing plan, write in one section advertising campaign, and in the second - methods of attracting regular customers.
- Determine what the main problem, that is, what problem the new business will solve.
As part of financial plan it is worth identifying possible unforeseen losses and options for raising additional money. Such reinsurance will avoid problems during implementation.
Today, there are many business development strategies, let's consider the most common among them, which have proven effective for a long time.
Key areas of entrepreneurship development:
- market penetration - access to new potential consumers through a territorial change in location, as well as the release of new products;
- market development - the opening of new outlets for goods and services;
- alternative channels - the choice of new distribution channels, for example, the use of an online platform;
- product development - improvement of manufactured goods and improvement of the quality of services provided by attracting specialists;
- new products - the creation of new goods and services allows not only to attract new customers, but also to expand the range of consumption of existing consumers.
When choosing a strategy, it is important to focus on the characteristics of the market, the age category of the bulk potential clients their interests and needs.
Where to get money - the main forms of sources of finance
The issue of finding money is especially acute when it comes to expensive business projects that require the purchase of equipment. To successfully complete the case, it is worth drawing up a detailed and truthful plan. Openness attracts investors. The main sources of business financing are divided into external and internal.
External
The main external sources of business financing include:
All external sources of funding are associated with the need to return funds to third parties. Investing in start-up businesses is a common form of investing money.
Internal
First of all, when looking for money, a novice and existing entrepreneur turns to his own money. The main resources used to finance a business, as internal, include:
- initial capital - basic investment in development;
- income received from activities;
- money of employees and relatives of a businessman.
The capital of the enterprise is based on the initial investments of the founders. Of course, in the twenty-first century it is possible to start a business without any money, but it is much easier when there is a certain amount accumulated on your own, which is investment capital.
There are several options for attracting investments at the initial stage of business development. All of them are available to a beginner in business, but you should not try to use everything at once. It is recommended to choose several main areas and focus on them. Start-up capital for small businesses, it is acceptable to find through different methods.
Own funds
The most common answer to the question: “Why don’t you start your own business? - No money". Indeed, most undertakings require an infusion of finance. They represent an investment in a start-up project. Below will be presented options for where you can take funds from outside, but it is often difficult to do without your own money.
As a rule, if a person does not have enough finance himself, then he attracts one or more people into a partnership. At the initial stage, and later on, it is easier to do business in a group, and of course, finding a certain amount, for example, is easier for three than alone.
It is recommended to immediately share the responsibilities between the founders and the principles of making a profit. There are many varieties: for some, dividends are determined equally, for others - in accordance with investments, and for others, based on the amount of work done.
State Grants and State Assistance Program
Receiving grants and other forms of assistance from government agencies- the procedure is long, burdened with the collection of many documents. In most cases, the authorities support initiatives in industries that are of interest to the country as a whole.
It is difficult to get a grant for an enterprise aimed at opening an amusement park or a cafe. However, if the project satisfies any social needs, for the implementation of which the authorities do not have free funds, then there is a chance to secure financial support.
When contacting government agencies, it is worth carefully working out the project, collecting all the documentation, obtaining permits, and the like. The allocation of money will occur only if the subject shows:
- the admissibility of activities, that is, the availability of permits;
- social significance - how it will help society or certain categories population;
- profitability - the business will not burn out;
- personal willingness to take responsibility for any outcome.
Features in the allocation of a grant are the need to pay tax on the money received and the phased receipt of funds in accordance with the business plan. Financing small businesses by the state is one of the priority areas in modern Russia. The difficulty is that for the past few years there has been a budget deficit.
Venture capital is a cash investment by third-party investors that is focused on new projects and start-ups. Investors are willing to take risks, but expect higher returns than those who finance standard destinations.
Thus, venture investors tend to invest in many non-obvious projects and benefit from the high returns of some of them.
When attracting this kind of capital, it is worth emphasizing the high profitability of the business in the short term. If this is acceptable by the realizable enterprise, then there are great chances of attracting venture capital investors.
Private foundations and business incubators
Business incubators are a fairly new direction in modern Russian Federation. They are organizations that oversee and support start-up entrepreneurs at all stages of development.
In most cases, their assistance is based on the provision of premises, legal support and accounting services. The provision of financial assistance is not provided in a direct form, but a businessman has the opportunity to save money in a number of areas, as well as receive the necessary consulting support.
Private funds created by businessmen and investors also represent one of the options for attracting third-party capital. The main thing is that the goals of the entrepreneur and his idea are consonant with the values and principles of the organization. As a rule, it is easier to obtain financing from a private foundation than from public authorities.
Business angel investments
A business angel is a cross between venture investors and an incubator, as it provides both financial and advisory support to a young entrepreneur at the start of project development.
In some cases, an option is provided when financing is carried out on the condition of business division, that is, the transfer of part of the company to an angel. This option is often considered by singles, that is, people who single-handedly open a company, as well as those who have not been able to raise capital by other methods. For example, at one time the Amazon company appeared precisely thanks to such investors, not a single banking organization believed in the idea of a company whose creator is the wealthiest person today. A business can be financed in different ways, in particular, with the support of other businessmen.
Bank lending
The most common way to attract external capital is debt in a financial and credit organization. The evolution of the development of the banking sector has led to the fact that the economic potential of the direction has gained great power. It is very difficult to predict whether a loan will be received, as banks take into account many aspects, and there is also a human factor.
When choosing this method, it is recommended to make an extensive list of potential lenders, and be willing to visit more than one institution. Business loans are issued by special people who are market analysts and evaluate the prospects for the development of a particular direction, but they are all people. The mood of this or that person, in particular, depends on whether the application will be approved.
A positive answer: whether it is worth lending to a client, is affected by such a factor as the availability of previously issued loans and their repayment. The most interesting thing is that banks are most loyal to those people who have had or have difficulties with returning money. For the bank, this is an indicator that they will take the maximum percentage from the client.
Leasing is a lifesaver for many aspiring entrepreneurs who are burdened by the purchase of expensive tools. Buying equipment is much more difficult and expensive than renting it.
As a rule, the interest rate is not very high, although it depends on the subject, and recoupment of the monthly payment is much easier than the cost of the instrument. A striking example of a modern leasing business is carsharing. A person, having rented a certain number of cars, rents it out every minute to everyone who wants it. His expense items are app maintenance and car maintenance. The rest of the difference between income and interest on leasing goes to him.
Loans
Loans are divided into short-term and long-term. In the first case, we are talking about a short-term loan of money, for example, to buy resources. The advantage of this type of loans is low interest and the absence of long-term financial dependence on the lender.
Long-term loans are usually secured by property. The essence of such a debt is that in case of non-payment of the loan, the lender seizes the property of the company as compensation for the lost money. Thus, the provision of property provides more opportunities for the entrepreneur. If the company does not have real estate, then any personal property, for example, an apartment or a country house, can act as collateral. People also pledge cars and other valuables as collateral.
Loans are provided with guarantors. This option is not presented in all banks, and in most cases it takes place when it comes to small amounts.
Crowdfunding platforms in Russia and abroad
Crowdfunding is a specialized platform where money is raised for specific purposes. Most of all, they are socially oriented, for example, helping victims of natural disasters, however, there are platforms focused on the development of certain business sectors.
In particular, young musicians often raise funds in this way to release an album or record a video. If a person feels that his undertaking will be interesting to large masses, then he can turn to this method of raising funds.
Moreover, the creation of the site does not have to be focused only on Russian investors. Often people from other countries actively support ideas that are close to them in spirit. Billions of dollars are raised each year through small donations. The main principle is voluntary participation, and the contribution can be even the smallest. Attribute this method it is not worth it to the main ones, but it can allow you to collect additional finances.
What sources of financing are beneficial for small or medium businesses?
There is no unequivocal answer as to what kind of financing for small and medium-sized businesses is better to choose. It all depends on the direction of the enterprise, the riskiness and the chosen strategy.
The advantages of internal sources of business financing are that there is no need to attract third-party money, but in practice it is not always possible to implement this option. The need to find additional funds, as a rule, is associated precisely with the lack of internal capital of the company.
When choosing a specific external source, it is advisable to choose loans with a low interest rate and a long term, if there is no confidence in the imminent receipt of income. It often takes several years to reach zero. With the Internet business, this situation is changing, profits can be made almost immediately.
In practice, there are different sources of financing for small businesses; when choosing, you should be guided by a prepared business plan. If an entrepreneur has the opportunity to start a business exclusively with his own money, then this is an expedient act, since otherwise it will be necessary to return the funds, without having a guarantee of success. A business can be financed in different ways, as a rule, an entrepreneur uses several methods. The more money is required to start or develop, the more options an entrepreneur resorts to.
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