Every company, for the conduct of its activities, needs financial resources. The main difficulty is based in identifying the types of financing most appropriate, since we have a wide choice . These types of loans are also dependent on the size and legal form of the company, but generally speaking, we can identify two distinct types of financing, equity and debt capital. Below, we see in detail, what are these types of loans and how to finance a business:

Shareholders’ equity consists of the contributions made ​​by the entrepreneur or by individual members of the company at the time of the constitution of the company and, later, with any capital increases, and the profits generated by the company management. It is bestowed upon indefinitely. The capital increases are also called capital contribution, and came up, when the entrepreneur or the partners decided to make new investments, and therefore, they decide to make a new contribution of financial resources. The profits generated by the company management, however, which are not picked up by the entrepreneur or by the shareholders and remain within the enterprise, are called capital savings.

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Often, the equity is not adequate to finance the entire business enterprise. For this reason, we resort to third-party capital , loans made ​​by third parties (who become creditors of the firm), fixed, because the company must return to the agreed deadlines and in a variety of ways. If the deadline is not greater than 12 months we are talking about short term loans, if the duration is from 1 to 5 years we are talking about medium-term loans, if the duration is longer than 5 years we are talking about long-term loans. The third-party capital includes debts of funding , signed by the company to have a sum of money , and payables, constituted by the payment terms to suppliers of goods or services.

Among the third-party funding, the most common remains, for many businesses, the bank loan, such as mortgage It is to receive a sum of money, to be repaid in due time by the parties. After expiry of this period of time, have to pay back the amount of money charged interest as compensation Large companies also rely on the use of bonds These are similar to bank loans, but, in this case, the loan is granted by individuals, institutions or other companies The company has to pay periodic interest and, at maturity, it must return the initial capital debts of operation, however, does not represent a real shift of money, but more simply, a credit from a supplier, which allows us a delayed payment without interest.