Business financing: main sources and programs. What are the sources of business financing? Internal and external sources of financing for your business

Heads and leaders financial structures of current 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 relations are drawn up 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, 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 several percent higher for 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, 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 - interest rate much lower in comparison with a classic loan.

State lending

• Direct capital investments. Data cash targeted at enterprises 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 combined group of investors (romantically called "business angels") 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 by shares. Such money is sent to the assets of the company 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 short-term speculation. accounts receivable, as a rule, with a discount of 10 - 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, his monetary value. 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. Required amount deduction is calculated from the original price of the asset under which the 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.

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 (those. total profit, excluding taxes) and residual profit(those. 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).

For businesses, both start-up and already developed, entrepreneurs are looking for sources of financing. Enterprises and organizations develop and live when there is constant financial income. At the same time, to open and organize your own business, your own cash savings are often not enough. When compiling financial plan funding sources need to be taken into account.

Funding sources can be divided into two types:

These two forms of business financing can be used both separately and combined with each other.

Business financing

For the successful development of any business, it is necessary to find funds; without free money, the business fades.

Also the state has programs for receiving grants, budget subsidies, loans with a lower rate. When distributing public funds, more attention is paid to innovative enterprises, socially oriented, production. For the funds received, you will need to report that they were used for their intended purpose. For some programs, funds are provided free of charge.

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.

You should not hope that cash investments are required only at the initial stages of the development of the business. 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 are planning to expand your business, you can use project finance. 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.

Especially for

Any business needs funding at the stage when it is just starting and has not reached self-sufficiency.

Young businessmen need support, and since the state is in no hurry to provide it, they have to look for alternative options, where everyone chooses to their taste.

External options

External sources include those that are not associated with the firm itself and allocate money from outside. They may be attracted by different things - from a share in the profits to a percentage of the debt - but the essence is always the same: you can always find someone who will finance the project.

There are two types of them:

• Debt. These are sources that provide money at interest and timely return. This method of financing is considered the best, since it implies that the relationship between the lender and the borrower will end as soon as the entire loan and interest on it are paid. However, there is a risk: if the company is unable to repay the loan, this will affect its reputation and overall financial condition.
• Equity. These are sources that provide money against a share in future profits or against a share in a firm. The relationship with the lender will never end, because after the conclusion of the contract, he becomes the owner of a part of the borrower's organization.

Debt includes:

• Loan secured by property. In this case, the guarantor that the loan will be repaid becomes the property of the borrower - most often immovable, as the most stable both in price and in safety.
• Overdraft. A loan in which the amount of the debt is paid not in installments, but in full, within a specific period.
• Bonds. In this case, the company pays with IOUs, securities, which imply that the debt will be paid on time.
• Leasing. In this case, the organization receives an asset in advance for use, as if on a lease, with the right to repurchase it later. It is considered the most profitable way of lending, since it involves receiving not just money, but a certain useful thing in work.

Shares include:

• Equity raising. In this case, the company issues shares, which over time will begin to bring profit to shareholders. At correct advertising and a well-thought-out business plan, you can make good capital on them.
• Attracting venture capital. Venture capital is like a game of Russian roulette - investors provide young companies with money if they find it interesting. In return, the investor receives a share in the company's income.

All external sources of funding involve risk. Loan defaults, investors misbehaving or refusing to invest further can undermine the fortunes of a young firm. Therefore, it is considered that best solution is an attempt to survive on internal resources.

Internal options

Internal sources include those that do not require the involvement of people from outside and do not differ in such great risks. Among them:

• retained earnings. If the company already has the first profit, it can use it to satisfy its needs and provide the next profit, which can be used to expand and improve the enterprise.
• Automatic funding. In this case, the passive credit debt of the company increases, as well as distributed, but not yet paid wage. They are used to meet the needs of the enterprise, which significantly increases its risks - if the business does not pay off, there will be nothing to pay wages and repay the loan.
• Capital optimization. In this case, finances appear due to the reorganization of the business. For example, a company buys better machines that will run twice as fast in the future, or cuts gas costs to free up additional cash.
• Getting rid of non-core assets . If an asset does not bring benefits, you can sell it and buy something that will bring it.

In general, the competent use of internal assets and start-up capital is the key to any successful business. But sometimes without external funding you just can’t do it - at the initial stages, for example, when the activity goes to zero and does not yet bring profit.

You can learn more about all the options for raising funds from the following video:

What do you need to get investment?

Money doesn't come from thin air. To get funding, you need to attract an investor, and to do this, you need a few things:

• A well-thought-out business plan that an investor can be interested in, and preferably a person who can present it. It should indicate:
  • The idea and purpose for which a business is created.
  • Its description is what it will bring to people, how it will look for the consumer.
  • Investment proposal - what exactly is required from the investor and what he will receive if the business works out.
  • Team - who is going to work on the project and how professional these people are.
  • Product, market and production - how the product or service will be produced, how it will be sold and whether buyers are interested in it.
  • Assets - what does the firm have in order to do business? Intellectual property should also be mentioned in this paragraph.
  • Business model - how everything will work, how the activity will be arranged from the inside.
  • Project economics – estimated funding, start-up capital, the time when the forecast is expected to make the first profit.
  • Actions to be taken after the investment is received – what will be bought, what will be improved and where it will lead.
• Pledge. If it is not possible to attract an investor solely on the idea - and this may well happen if it is not truly brilliant (and in this case history knows examples when a genius never found funding), something will need to be offered bank as collateral for a loan. Real estate or a car is fine.
• Credit history. To get a loan, it is necessary that there are no past due debts.

In addition, you need patience in order to continue trying after the tenth refusal, and determination, so that even after the hundredth “no” you continue to believe in your project and achieve its implementation.