What are the basic financing methods for start-ups?

Financing method refers to the specific form of financing for enterprises. More financing methods mean more financing opportunities for businesses to choose from. If an enterprise can not only obtain commercial credit and bank credit, but also directly raise funds by issuing stocks and bonds, and can also use discounts, leasing, compensation trade, etc. to raise funds, it means that the enterprise has more opportunities to raise funds. Funds required for production and operation.

That 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 is the sale of ownership of a company to other investors, that is, exchanging the owner's equity for funds. This will involve allocating the operating and management responsibilities of the company among the partners, owners and investors of the company. Equity financing allows business founders to share business profits with them and assume management responsibilities without having to use cash to repay other investors. Investors share business profits in the form of dividends.

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Response time: 2021-08-31. For the latest business changes, please refer to the official website of Ping An Bank.

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