Tax Day and Finance Advice

One of the functions of finance in a company, is to seek funding.

This search for funding is given basically for two reasons:

* When the company is lack of necessary liquidity to meet daily operations, for example, when you need to pay the debts or obligations, buy supplies, maintain inventory, pay salaries, rent the premises, etc..

* When the company wants to grow or expand, and does not have sufficient equity capital to meet the investment, for example, when you want to buy new equipment, when you want to have more teams, get more goods or raw material for increase the volume of production, enter new markets, develop or launch a new product, expand the local, open new branches, etc..

Let’s look at what are the main sources of funding for what we can in search of money or funding that we may need to continue operating as a company, or to invest and make it grow:

Family or friends

The simplest way to obtain financing is borrowing money from friends or relatives. This source is typically used only when the money needed is small.

Banks

The most common way to obtain financing is requesting a loan from a bank.

To grant a loan to a company, it is usual that banks ask for a minimum of six months experience in the market.

If the amount is high, it is usual to ask for guarantees, either property or business assets or personal property.

Non-bank financial institutions

Some of them specialized in small and medium business, so that the requirements are usually lower than calling a bank, but the loan amount granted is generally lower, usually granted for a shorter time, and usually has a higher cost or interest rate.

Leasing Companies

Banks or financial institutions that provide leasing the product, which is a contract whereby we ask the bank or financial institution to acquire ownership of an asset (eg machinery or equipment), so that later leased it to us and, after completion of a deadline, we buy it.

Factoring Companies

Banks or financial institutions to lend the proceeds of factoring, which is a contract by which you give in to a bank or financial institution the rights of our accounts receivable in exchange for the pay us in advance (after deduction of interest or fees the bank may charge us).

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