Every company, for the conduct of its activities , requires financial resources. The main difficulty is based in identifying the forms of financing more appropriate, as we have a choice. These forms of financing also depends 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.

The equity consists of the contributions made by the entrepreneur or individual members of the company at the time of the constitution of the company and, as a result, which can raise capital and profits generated by the company management. It is bestowed indefinitely. The capital increases are also called capital contribution, and came up, when the entrepreneur or partners decide to make new investments and then decide to make a new contribution of financial resources. The profits generated by the company management, however, which are not taken by the entrepreneur or by the shareholders and remain within the company, are called capital savings.


Often, the equity is not adequate to finance the entire business enterprise. For this reason, we resort to borrowed capital, loans made ​​by third parties (who become creditors of the firm), fixed-term, as 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 more than 5 years we are talking about long-term loans. The borrowed capital includes debt financing, signed by the company to have a sum of money , and payables, consisting of arrears to suppliers of goods or services.

Between debt financing, the most common is, for many companies, the bank loan, such as a mortgage. It is to receive a sum of money, to be returned at the appointed time by the parties. After expiry of this period, we will return 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 to individuals, institutions or other companies. The company has to pay periodic interest and, at maturity, should return the initial capital. The operating payables, however, do not represent a real shift of money, but more simply, a credit provider, which allows us a delayed payment without interest.