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Ten Types Of Financing For Companies, SMEs,The Self-Employed

Ten Types Of Financing 

In this post, we are going to see the different forms of funding for companies and entrepreneurs.  To be able to square the viability plan.

From typical types of financing to new forms of funding. Before requesting financing, look closely at various financial entities because the differences between one and the other are usually notable.

There are systems to finance you within these ten types of financing without counting on the banks that are equally suited to your needs. Because in the end, it seems the only form of funding that companies are looking for is bank loans.

Also, Study Carefully What Your Actual Needs Are.

1. Credit Policy.Credit Policy

A credit or a policy is an operation in which a financial institution makes money available to us according to our needs. We have that money there, and we will spend it as we need it—the same as credit cards. Interest will remain generated on what remains finished (it could be 4% depending on the financial institution).

What is it usually used for? For example, if for a job you need to hire people, teams. You take out a credit policy and pay it back when you get paid for the job. For credit policies, an endorsement is not usually requested, but good billing is.

2. Loan.

It is the most common kind of financing for companies. The amount of capital needed is requested, and the principal is returned with interest, usually month by month.

When is a loan usually requested? It is for long-term financing operations of significant capital, whether it is the acquisition of fixed assets or the startup of a considerable investment.

You can see in this article the difference between loans and credit.

Within the loans are the ICO lines. They are lines of financing with which the Official Credit Institute provides funds to companies through banks.

These entities carry out the operation analysis, so they will be the ones who study the viability of the project.

The interest for this year ranges from 2% to 5%, depending on the year of the credit. ICO credits remain aimed at large or small companies and from any sector.

3.- Commercial Credit.

Also called a commercial discount, it is a deferral that companies grant their customers to sell goods or services. You agree to pay 60 days to give yourself time to sell the goods purchased from the supplier.

4.- Renting and Leasing.

Although we are a country where we own things, it is good to use these financing methods to produce a lot of savings to be more comfortable. It is simply the rent. Instead of buying a car, copier, expensive computer equipment. We can rent or lease and pay month by month.

The only difference between Renting and Leasing is that leasing offers the option to purchase. It remains more aimed at the final purchase. The advantage of Renting is that it usually includes the maintenance of the equipment in the cost. You can see the difference between leasing and renting in this article.

5.- Factoring.

The outstanding invoices billing you anticipate. You assign the collection rights in exchange for an interest. To do so, the debtor company has to be very solvent, since if it did not pay, it would not claim us if not to whom we have assigned the invoice.

6.- Microcredit.

They are personal loans for the financing of companies or ecological and social projects. Social microcredits do not need an endorsement. They are usually minimal loans, no more than 20,000 euros. The beneficiaries of these microcredits remain usually self-employed immigrants, followed by women and to a lesser extent by young people and other groups.

7.- Crowdfunding.

Crowdfunding is collective financing, usually online that through financial or other donations they manage to finance a particular project in exchange for rewards, participations altruistically.

If the project is interesting, you move it well and offer rewards (if it is a product that you will manufacture, the premium would be that product or service), it can be a good starting point.

 8.- Crowdlending Crowdlending is Even Newer.

Typically there remain online companies dedicated to granting loans. What they do is connect companies that want money with investors who can lend it. It is financing between individuals. The interest is usually 5%, and there are usually no early termination costs.

9.- Bussines Angel.

Individuals with a lot of capital invested in startups (usually in the early stages) in exchange for a shareholding.

Most business angels expect to see a return on their investment in a few years,  and some determination takes an active role. It means sitting in command of the company or acting as an advisor, while others may prefer to become partners and provide the capital, although they will always be on the lookout.

Related to these are also business incubators or accelerators. For projects that are in the initial phase, it is an excellent way to get financing.

Look at our post with the calls and contests for companies and entrepreneurs of 2021. There are fascinating calls. It is probably one of the best financing systems for startups.

10.- Family and friends.

They were known as the three efes. Friends, family, and fools (FFF). They are usually the first investors to support the entrepreneur’s project. Friends, families, and sports. It is not advisable to abuse this system, but it is an aid that must remain valued,

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