Financing- a way to provide entrepreneurship with cash. Domestic sources of financing - sources of income Money, which are formed due to the results entrepreneurial activity. These can be investments of the founders of the company in the authorized capital; cash received after the sale of the company's shares, the sale of the company's property, the receipt of rent for the lease of property, income from the sale of products.

1) Profit (gross)- the difference between its income and costs or production costs, i.e. total profit received before all deductions and deductions. Net income (residual profit) is the difference between the amount of sales proceeds and all costs of the enterprise.

2) Depreciation- calculated in monetary terms, the depreciation of fixed assets in the process of their application, production use. The instrument for compensating for the depreciation of fixed assets is depreciation deductions in the form of money allocated for repairs or construction, or the manufacture of new fixed assets. The amount of depreciation is included in the production costs (cost) of products and thus goes into the price.

External funding sources

1) debt financing - borrowed capital (short-term loans and loans; long-term loans).

– Loan capital is an independent part of economic capital, which functions in the form of cash in the field of entrepreneurial activity.

- Mortgage loan - mortgage loan. This loan is the most common form of secured loan. Its essence is that the company, when receiving debt financial resources guarantees the creditor to repay the debt, including interest.

- Trade credit is a commercial loan, which means that an entrepreneur buys a product by postponing its payment.

– Shares are a common form of raising money. By issuing and selling shares, an entrepreneurial firm receives a debt loan from the buyer, as a result of which the shareholder acquires the right to the property of the company, as well as to receive dividends. Dividends in this case are interest on a loan, which is presented in the form of money paid for shares.

2) Transformation of an individual enterprise into a partnership.

3) Transformation of the partnership into a closed joint stock company.

4) Use of funds from various funds to support small businesses.

5) Gratuitous financing is the representation of funds in the form of gratuitous charitable donations, assistance, subsidies.

Selling shares is also a way to raise finance from outside, and it is a very important source of funding since a firm can have hundreds or thousands of shareholders.

State budget financing:

– The state allocates funds to public sector enterprises in the form of direct capital investments. Public sector enterprises are owned by the state. This means that the state also owns the profit from their activities.

- The state can also provide firms with its funds in the form of subsidies. This is a partial financing of the activities of firms. Subsidies can be issued to both public and private firms. The main difference between state financing and a bank loan is that the company receives funds from the state free of charge and irrevocably.

- State order: the state orders the company to manufacture a particular product and declares itself to be its buyer. The state does not finance costs here, but provides the company with income from the sale of goods in advance.

When choosing sources of financing for business ideas, most entrepreneurs do not take into account that investments are needed not only at the stage of opening, but also throughout the life of the established enterprise. If you want the project to be successful and long-term - learn how to raise funds!

The concept of "business financing" and classification

This term means the supply (providing) of entrepreneurial activity with financial resources. Depending on the place of origin of material resources, internal and external financing are distinguished.

At the initial stage of formation production process managers use external resources, the origin of which is provided by the following sources:

• state ;
• banking organizations;
• shareholders;
• non-profit companies;
• partner firms;
• individuals.

When production begins to generate income, it becomes possible to attract internal resources, including:

• net profit;
• revenue of the future periods;
• (deductions for equipment);
• target reserves allocated to cover future costs.

Ideally efficient and profitable business- self-sustaining and does not require external costs. However, at first and during the expansion of the scope of activities, it is difficult to do without appearance funding - further on each of them in detail.

The main sources of business financing in comparison

Common among subjects economic activity practice - attraction of borrowed money. To maintain the right to full control own business, most entrepreneurs take loans, credits, loans.

Bank lending

Loans from banks occupy a leading position among the ways to finance small businesses, covering an extended range of cost assignments: industrial, consumer, agricultural, mortgage loans.

pros:

• prompt decision on extradition;
• independent distribution of funds without control and instructions from the investor.

Minuses:

• short term of use (standard - 36 months);
• the need to provide collateral; mandatory payment of interest and insurance premiums.

Leasing programs

Leasing is a complex form of financial lending based on the provision of fixed assets for rent with subsequent redemption.

The subject of leasing can be enterprises, land plots, vehicles, equipment, property (movable and immovable).

pros:

• financing is calculated in 100% ratio with the cost of equipment - for comparison, banks require 10-15% of the price;
• there is no requirement to provide a pledge - such is the leased (purchased) equipment (site, transport);
• debt in the balance sheet of the organization does not increase;
• more loyal conditions in comparison with a bank loan;
• all payments by the lessee are included in the costs of the enterprise.

Minuses:

• when applying for a lease, an initial payment may be required - up to 30% of the value of the property;
• for entrepreneurs working under the simplified taxation system, not all leasing lending schemes are suitable - you should carefully choose a company for cooperation;
• VAT is charged on the lease amount.

trade loan

Form of mutual settlements between firms. You can order the necessary goods (equipment) with a deferred payment. This method is often used by entrepreneurs whose activity is the sale of products from another manufacturer: they take a wholesale batch of goods for purchase, and the calculation is made after it is sold in a retail network.

A method of mutually beneficial cooperation between firms of different directions is also possible - the ordered goods (service) are paid in kind - by what another company produces.

State subsidies, tax incentives

Beginning entrepreneurs receive government assistance in starting a business. One of the means of such assistance is grants. These are one-time payments from the state, bodies local government or international organizations to cover part of the costs, capital costs or contributions.

In addition, the taxation system provides special conditions for individual entrepreneurs(IP), regulated federal law No. 477-F3.

The following individual entrepreneurs can obtain the right to tax holidays (zeroing the tax rate) in 2016:

• registered for the first time;
• who have chosen one of the taxation schemes - simplified (STS) or patent (PSN);
• leading activities in the social, industrial or scientific sectors.

Holidays are not established throughout Russia, in each region they are established by the local authorities at their discretion. The benefit is also valid in 2020. Please note that it is calculated for two tax periods (years) for each specific individual entrepreneur.

Still, no matter how good and promising the idea may look, minimize spending and rely on own resources, remembering the notorious saying: "You take someone else's, but you give yours!"

Grants and other sources of project funding

Undoubtedly, the most attractive form of financing for small businesses is a gratuitous targeted subsidy for research, training, treatment and implementation. social projects. However, to be eligible for a government or commercial grant, your idea must meet the following criteria:

1. presenting an evidence-based justification for the importance of the project;
2. quick payback - grants are allocated for short term(from several months to a year);
3. a clearly developed plan for the implementation of a business idea with an indication of the timing of achieving the goals;
4. willingness to take on a certain part of the costs;
5. a report for each penny spent from the allocated funds.

Although government grants are more designed to support scientists and young professionals, Russia annually allocates funds from the budget to subsidize small forms of ownership.

In parallel, they are being developed at the state and regional levels - information on existing projects is presented in the territorial employment centers and on the official website of the Ministry of Finance.

Foreign investors are also looking for promising representatives of small businesses and are ready to invest in the development interesting projects impressive amounts. However, keep in mind that such “donors” often demand a share of ownership or a large percentage of the profits in return, and also set the condition for officially securing authorship of the idea.

If you cannot do without attracting additional investments, once again make sure that the decision you made is correct, calculate all possible risks and set yourself a time frame for repaying the loan, which you will definitely meet!

Investment is necessary not only during the launch of the business, but throughout its operation. Sources of business financing can be from personal funds and coming from outside. External capital is attracted at the time of lack of own capital to pay off debt, or as assistance in expanding the production line. In Russia, the state also provides support to entrepreneurs, annually informing social services about its nature.

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Classification of funding sources

Main Sources of business financing are divided into the following types:

• creditors;
• investors;
• own finances.

Companies that have established a workflow in accordance with their business plan can afford to finance entrepreneurship on their own. In most cases, the entrepreneur is supported by others. external sources. It should be remembered that the use of third-party capital increases costs due to deductions.

Internal sources

When an enterprise can be financed independently, without outside help, the owner has full control over business.

Examples of domestic funding sources:

1. Net profit. Investing most of the funds in further development allows you to ensure a successful existence and reduce the risk of ruin.
2. Depreciation deductions. That monetary asset that could be spent on the repair and maintenance of equipment.
3. Accounts payable. It involves the postponement of bank payments with an increase in their size in the future. Can be used as a temporary measure.
4. Deduction of wages for employees of the enterprise. Financial documents are used to calculate and accrue salaries, which are not actually paid. Delay can be a short term measure.
5. Factoring. This source implies a deferred payment by agreement with the supplier company or the manufacturer of the necessary components.
6. Reset assets. In the case when the company has a direction with unprofitable, zero or low profitability, you can get rid of such a line in favor of another.
7. Reserve fund. Funds earmarked for unforeseen financial expenses.
8. Process optimization. Allocation of funding to the most profitable production or creation of a new additional source of income.

Government funding

Support programs for start-up entrepreneurs are posted on the website of the Ministry of Finance. To receive assistance from the state, it is necessary to draw up a business plan with a mandatory indication of the payback period.

It is important to keep in mind that in order to receive finance, one approval of a business plan is not enough; you must have your own resources available. The state partially covers the expenses of the entrepreneur, depending on the type of assistance. Or becomes the customer of the produced goods and services.

Interbudgetary state relations

In 2019, the following types of state support are provided:

• free advice on legal and other issues;
• payment for education necessary for the implementation of a business idea;
• assistance in purchasing production capacity at the lowest cost;
• cash assistance in the process of production (partially) and rent of public premises;
• financing of 20% of the cost of purchased raw materials;
• partial repayment of loans;
• grants;
• subsidies;
• preferential participation in events such as an exhibition or fair;
• business incubator (profitable lease of state premises);
• guaranteeing the obligations of the entrepreneur to the bank.

O state support small and medium-sized businesses in Russia are detailed in a video taken from the Aktiv Finance Group channel.

Grants

Grants imply a one-time assistance from the state. The amount of assistance is regulated Budget Code RF. The Accounts Chamber will necessarily control the movement of allocated finances. If they are spent on needs other than those specified in the business plan, the state will not continue to help and cover the costs. As a rule, subsidies are allocated to entrepreneurs who produce goods included in the consumer basket or benefit the region. Basically it is agriculture.

tax incentives

The Law of the Russian Federation No. 477-F3 refers to the possibility of temporary relief for entrepreneurs. Under certain conditions, an entrepreneur can be exempted from paying taxes for a period of 2 years. To receive benefits, you must have the first registration with a simplified taxation system (STS) or a patent (PSN).

Screenshot of the main page unified registry tax holidays What taxes must be paid if there is a subsidy Terms of tax holidays

Lending

A loan from the state comes in several forms:

• allocation of funds;
• bank loan guarantee;
• export assistance.

Interest on credit funds will be lower than in a bank. When receiving money to repay a loan, it is possible to receive a deferral of payments.

Bank lending

It is possible to obtain a bank loan secured by property or working capital. Banks provide various lending programs for small and medium-sized businesses. As a rule, the amount does not exceed 1 billion rubles, and is issued for a period of up to 3 years. The loan rate is 10-11% per annum and cannot be higher. Funds are allocated for the purchase of equipment or for other purposes specified in the contract. At the same time, the bank that gives the loan becomes a business partner. This gives him the right to control the financial condition of the entrepreneur until the full repayment of the loan and the interest rate on it.

There are a number of industries that lenders prefer:

• Agriculture;
• construction;
• transportation;
• food production;
• communication services.

Leasing

Leasing involves the long-term lease of property, equipment and/or tax benefits. In the latter case, when it comes to renting premises or production facilities by an entrepreneur, a subsidy can also be provided to the lessor.

Leasing involves the ability to buy out leased assets:

• company;
• land plot;
• structure;
• vehicle;
• property.

The advantage of this lending method is that no collateral is required. If the entrepreneur redeems the assets, he pays their real actual cost - without any extra charge. But when applying for a loan, you must pay up to 30% of the assessed value of assets.

In Russia, not all types of activities are leased. It depends on the form of taxation.

The amount of loan payments refers to the enterprise cost fund and VAT is charged on it.

Trade loans

These relationships involve the provision of deferred payments from firms with which the entrepreneur cooperates. This applies to the field of trade, when the goods of another supplier are sold. The form of relations in the form of an exchange is possible. A product is exchanged for another product or service.

Equity financing

This type of assistance involves attracting an investor who becomes a co-owner of the business. He makes a one-time contribution to the statutory fund with possible further investments. Sometimes investing concerns one of the directions.

Bonds

Bonds are loans with interest. It is paid by the entrepreneur to the investor.

The following options are possible:

1. Coupon. Loan repayment is carried out 2 times within 12 months. The conditions may be different, for example 3-4 times. It is written in bonds. The interest rate (annual) is broken down accordingly.
2. Discount. In this case, the interest rate is floating.

A variety of bonds depending on the timing of issue:

• short-term - 1-2 years;
• medium-term - 5-7 years;
• long-term - from 7 years.

Overdraft

Overdraft is bank lending by opening a credit account linked to the main account of the entrepreneur. The maximum amount of this type of loan is 50% of the average turnover of the company's funds per month. The loan guarantees the provision of payments for any needs of the company, if at a particular moment the company's personal funds are not enough. The bank charges a fee for maintaining the main account and exposes a loan interest when the entrepreneur does not repay the debt within the agreed time frame. Such repayment occurs by synchronization with the main account and automatic money transfers.

Any business needs funding at the stage when it is just starting and has not reached self-sufficiency.

Young businessmen need support, and since the state is in no hurry to provide it, they have to look for alternative options, where everyone chooses according to their taste.

External options

External sources include those that are not associated with the firm itself and allocate money from outside. They may be attracted by different things - from a share in the profits to a percentage of the debt - but the essence is always the same: you can always find someone who will finance the project.

There are two types of them:

• Debt. These are sources that provide money at interest and timely return. This method of financing is considered the best, since it implies that the relationship between the lender and the borrower will end as soon as the entire loan and interest on it are paid. However, there is a risk: if the company is unable to repay the loan, this will affect its reputation and overall financial condition.
• Equity. These are sources that provide money against a share in future profits or against a share in a firm. The relationship with the lender will never end, because after the conclusion of the contract, he becomes the owner of a part of the borrower's organization.

Debt includes:

• Loan secured by property. In this case, the guarantor that the loan will be repaid becomes the property of the borrower - most often immovable, as the most stable both in price and in safety.
• Overdraft. A loan in which the amount of the debt is paid not in installments, but in full, within a specific period.
• Bonds. In this case, the company pays with IOUs, securities, which imply that the debt will be paid on time.
• Leasing. In this case, the organization receives an asset in advance for use, as if on a lease, with the right to repurchase it later. It is considered the most profitable way of lending, since it involves receiving not just money, but a certain useful thing in work.

Shares include:

• Equity raising. In this case, the company issues shares, which over time will begin to bring profit to shareholders. At correct advertising and a well-thought-out business plan, you can make good capital on them.
• Attracting venture capital. Venture capital is like a game of Russian roulette - investors provide young companies with money if they find it interesting. In return, the investor receives a share in the company's income.

All external sources of funding involve risk. loan defaults, incorrect behavior investors or their refusal to further investment - all this can undermine the condition of a young firm. Therefore, it is considered that best solution is an attempt to survive on internal resources.

Internal options

Internal sources include those that do not require the involvement of people from the outside and do not differ in such great risks. Among them:

• Undestributed profits. If the company already has the first profit, it can use it to satisfy its needs and provide the next profit, which can be used to expand and improve the enterprise.
• Automatic funding. In this case, the passive credit debt of the company increases, as well as distributed, but not yet paid wage. They are used to meet the needs of the enterprise, which significantly increases its risks - if the business does not pay off, there will be nothing to pay wages and repay the loan.
• Capital optimization. In this case, finances appear due to the reorganization of the business. For example, a company buys better machines that will run twice as fast in the future, or cuts gas costs to free up more money.
• Getting rid of non-core assets. If an asset does not bring benefits, you can sell it and buy something that will bring it.

In general, the competent use of internal assets and start-up capital is the key to any successful business. But sometimes you simply cannot do without external financing - at the initial stages, for example, when the activity goes to zero and is not yet profitable.

You can learn more about all the options for raising funds from the following video:

What do you need to get investment?

Money doesn't come from thin air. To get funding, you need to attract an investor, and to do this, you need a few things:

• A well-thought-out business plan that an investor can be interested in, and preferably a person who can present it. It should indicate:
  • The idea and purpose for which a business is created.
  • Its description is what it will bring to people, how it will look for the consumer.
  • Investment proposal - what exactly is required from the investor and what he will receive if the business works out.
  • Team - who is going to work on the project and how professional these people are.
  • Product, market and production - how the product or service will be produced, how it will be sold and whether buyers are interested in it.
  • Assets - what does the firm have in order to do business? Intellectual property should also be mentioned in this paragraph.
  • Business model - how everything will work, how the activity will be arranged from the inside.
  • Project economics – estimated funding, start-up capital, the time when the forecast is expected to make the first profit.
  • Actions to be taken after the investment is received – what will be bought, what will be improved and where it will lead.
• Pledge. If it is not possible to attract an investor solely on the idea - and this may well happen if it is not truly brilliant (and in this case history knows examples when a genius never found funding), something will need to be offered bank as collateral for a loan. Real estate or a car is fine.
• Credit history. To get a loan, it is necessary that there are no past due debts.

In addition, you need patience in order to continue trying after the tenth refusal, and determination, so that even after the hundredth “no” you continue to believe in your project and achieve its implementation.

Where can I get a source of finance for a business or individual projects? As part of the article, all options will be considered: both easy and complex. Also, attention will be paid to both popular ways of receiving money, and rather little-known or complex ones.

general information

Business financing is the possibility of providing funds for which the internal processes of a company or enterprise will be carried out. Conventionally, the sources of money, depending on the place of their occurrence, can be divided into two groups:

1. Internal.
2. External.

The former include net profit, depreciation, accounts payable, stable liabilities, reserves for future expenses and payments, as well as deferred income. The second includes the authorized capital, funds of the state, citizens, financial and credit organizations, founders and participants.

When and where and what is used?

Internal financing of a business involves the use of those resources that are generated in the course of the economic activities of a commercial structure. In general, this is a more desirable option. Whereas external financing of a business involves the receipt of funds from the outside world. Conventionally, they can be divided into those that come in the order of distribution and are mobilized in the market of monetary instruments. Before continuing the article, let's list all the sources of business financing.

Where can you get money?

The sources of formation always act as the basis and grouping:

1. Formed through their own means.

I. Authorized, additional and reserve capital.

II. Net and retained earnings.

III. Depreciation.

IV. Accounts payable.

V. Sustainable liabilities.

VI. Revenue of the future periods.

VII. Target income.

VIII. Reserves for future payments and expenses.

IX. Other receipts.

2. Mobilized in the financial market.

I. Credit.

II. Dividends and interest received from ownership valuable papers other issuers.

III. Income from operations with precious metals and foreign currencies.

IV. Interest on the use of previously provided funds.

V. Sale of own securities.

3. Received in order of distribution.

I. Financial resources that were formed on a share basis.

II. budget subsidies.

III. Insurance premiums.

IV. Receipts from associations, industry structures and holdings.

Peculiarities

It should be noted such a pleasant fact: financial resources, in contrast to labor and material, are exceptionally fungible. And now about the negative: they are also subject to devaluation and inflation. And one more thing, but it is more a matter of personal position. Previously, only two main groups were given. Some researchers do not mention external sources as such, but speak of attracted and borrowed funds, as well as mixed (combined) financing. These three possibilities will be considered separately.

Most topical issue, for the solution of which money is actually attracted, is the need to expand or update the main production assets. Therefore, the specifics of fundraising and business financing will be discussed with an eye to this aspect.

Internal sources

Enterprises are independently engaged in the distribution of that part of the income that remains at their disposal after deducting the amounts of cost and taxes. Rational use of funds involves the implementation of plans for the further development of the enterprise while respecting the interests of owners, investors and employees. There is, however, one rule. The more profit goes to expanding economic activity, the less need for additional financing. At the same time, the value largely depends on the profitability of the operations carried out and the dividend policy adopted within the enterprise.

This method of raising funds has wonderful advantages: there is no need to incur additional costs, and the owner retains control over the enterprise. Alas, there are also disadvantages. The most significant is the impossibility of using this approach. So, in the case of fixed assets, the sinking fund can be depleted. And then you have to look for other ways to get funding.

Fundraising

This path is quite diverse, it has many positive and negative aspects. Due to the wide range of possibilities, external sources will receive the most attention. When looking for this type of investment, you should be aware that investors are interested in high profits, the company itself, as well as the share of ownership that they will receive.

How more money will be invested, the less control will remain with the original owners of the enterprise. The redemption for the market price or a certain coefficient depending on the income of the enterprise can be separately agreed. And you need to understand that this is more suitable at least for medium-sized enterprises and larger ones. Something can be said about financing small businesses, but this is more an exception than a regular practice. Well, in this case, it remains to concentrate on borrowed funds. For business, leasing and credit are the most suitable. Many people compare them and say that they are literally identical, but they are not. Let's see why.

Loans

These are the most famous main sources of business financing. A loan means a loan in cash (rarely in commodity) form, which is provided on a repayment basis. It provides for the payment of interest for its use. The advantage of a loan is that the receipt and use of funds, as a rule, is not subject to special conditions. And in the case of issuance by a bank where the enterprise is serviced, it is issued quite quickly and without delay.

There are, however, certain disadvantages. Thus, the term of issue rarely exceeds three years. Therefore, for enterprises that focus on long-term profit, it is unbearable. Also, the disadvantage is the requirement to provide a deposit, which is equivalent to the amount issued. There may, although rarely, certain special conditions be put forward, such as opening a checking account with a bank that offers a loan. And this may not always be beneficial to the enterprise. Also, due to the use of the standard depreciation scheme, the company will be forced to pay property tax all the time while using the loan.

Leasing

We are finishing considering the sources of financing for small businesses and will focus on a not very popular and well-known tool, which, nevertheless, is very worthy if you understand its essence.

So, leasing is a special complex form of entrepreneurial activity, which allows one side to effectively update the used fixed assets, and the other to expand the boundaries of its representation. And this happens on terms that satisfy both parties. If we talk about business financing programs from external sources, then this can be called the best option.

What are the advantages of leasing? First of all, the absence down payment and demands to start paying immediately. Whereas in the case of a loan, you need to make from 15% to 60% of the down payment. Thanks to this, an enterprise that does not have significant financial resources can begin to implement a large project. In addition, using this tool is much easier than proving that you can afford a loan. It is the financing of business projects at the stage of their inception that allows you to make a choice in favor of leasing. In addition, the agreement is more flexible. After all, in this case, the company independently calculates how much income it will have, and according to what scheme it will work. It can be agreed that debt repayment will come from the funds that will come from the sale of products. And after the payment of the entire amount, the property becomes the property of the company.