Financing method is the channel for corporate financing. It can be divided into two categories: debt financing and equity financing. The former includes bank loans, issuance of bonds and notes payable, accounts payable, etc., while the latter mainly refers to stock financing. Debt financing constitutes a liability, and the company must repay the agreed principal and interest on time. Creditors generally do not participate in the company's business decisions and have no decision-making power over the use of funds. Equity financing constitutes the company's own funds. Investors have the right to participate in the company's business decisions and receive dividends from the company, but they have no right to withdraw funds.
Bank loans
Banks are the main financing channel for enterprises. According to the nature of funds, they are divided into three categories: working capital loans, fixed asset loans and special loans. Special loans usually have specific purposes, and their loan interest rates are generally more favorable. The loans are divided into credit loans, guaranteed loans and bill discounts.
Stock financing
Stocks are permanent, have no expiration date, do not need to be returned, and have no pressure to repay principal and interest, so financing risks are relatively small. The stock market can promote enterprises to transform their operating mechanisms and truly become legal entities and market competition entities that operate independently, are responsible for their own profits and losses, self-development, and self-restraint. At the same time, the stock market provides a broad stage for asset restructuring, optimizing corporate organizational structures, and improving corporate integration capabilities.
Bond Financing
Enterprise bonds, also known as corporate bonds, are securities issued by enterprises in accordance with legal procedures and agree to repay principal and interest within a certain period of time. They represent the bond-issuing enterprise and There is a creditor-debt relationship between investors. Bond holders do not participate in the operation and management of the enterprise, but have the right to recover the agreed principal and interest on schedule. In the event of corporate bankruptcy and liquidation, creditors have priority over shareholders in claiming the remaining property of the company. Corporate bonds, like stocks, are securities and can be freely transferred.
Financial leasing
Financial leasing, through the combination of financing and financing, has the dual functions of finance and trade. It can improve the financing efficiency of enterprises and promote and promote the development of enterprises. Technological progress has a very obvious effect. Financial leases include direct purchase leases, sale-leasebacks and leveraged leases. In addition, there are various leasing forms such as the combination of leasing and compensation trade, the combination of leasing and processing and assembly, and the combination of leasing and underwriting. The financial leasing business has opened up a new financing channel for the technological transformation of enterprises. It adopts a new form of combining financing and property, which speeds up the introduction of production equipment and technology. It can also save the use of funds and improve the utilization rate of funds.
Overseas Financing
The overseas financing methods available to enterprises include loans from international commercial banks, loans from international financial institutions, and corporate bond and stock financing businesses in major overseas capital markets.
Pawn Financing
Pawn is a financing method that uses physical objects as collateral and obtains temporary loans in the form of transfer of physical property ownership. Compared with bank loans, pawn loans have high costs and small loan sizes, but pawns also have advantages that bank loans cannot compare with. First of all, compared with banks’ almost demanding credit requirements for borrowers, pawn shops have almost zero credit requirements for customers. Pawn shops only focus on whether the pawned items are genuine. Moreover, generally commercial banks only mortgage real estate, while pawn shops can pledge both movable and real estate. Secondly, the starting point for pawning items at a pawn shop is low, and items worth a thousand yuan or a hundred yuan can be pawned. Contrary to banks, pawn shops focus more on serving individual customers and small and medium-sized enterprises. Third, compared with bank loans, which have complicated procedures and long approval cycles, pawn loan procedures are very simple and can be obtained immediately. Even real estate mortgages are much more convenient than banks. Fourth, when a customer borrows money from a bank, the purpose of the loan cannot exceed the scope specified by the bank. Pawn shops, on the other hand, do not ask about the purpose of the loan, and the money can be used very freely. Repeatedly, the capital utilization rate has been greatly improved.