What are the ways that a company can borrow funds and what are the advantages of each of these ways?

Bank loans - difficult and low interest rates, P2P network loans - high interest rates.

Borrowed funds from enterprises can also be called.

Hello, dear. Explanation of borrowed funds: also known as absorbing funds.

Symmetry of own funds. It refers to the funds obtained by an enterprise from other enterprises or individuals. The items of borrowed funds mainly include bank loans, payables, taxes payable and wages payable.

Bank loans must be used for the intended purpose, repaid when due, and paid interest. After the trial of full credit, the fixed and over-quota part of the working capital will be in the form of credit, and loans will be obtained from banks. The various debts formed in the settlement can only be used by the enterprise for a short period of time, and the figures are constantly changing.

Borrowing funds is an important aspect of enterprise funds, making full use of bank loans or debts in the sale and settlement of loans, which can make enterprise funds occupy corresponding funds.

In January 2004, he took the self-study exam "Financial Management" and asked the third multiple-choice question.

a.Bank credit funds.

b.Issuance of corporate bonds.

c.Issuance**.

d.Joint fundraising.

See the answer explainedCorrect Answer:bProofreading Answers:According to the introduction on page 92 of the textbook, we can see that both items of this question ab can be considered correct.

Where A is a bank loan, but since the question is about the method, if A is borrowing credit funds from a bank, then A should also be chosen. As a single-choice question, we should choose the most rigorous one, and we should choose B.

Summary. Capital is always the blood of the enterprise, is the basis for its existence and development, but not the larger the funds left by the enterprise, the better, the enterprise can retain a certain amount of funds, the key is to speed up the turnover of funds to improve economic efficiency

Treasury is an important part of financial management. Many issues around the survival, development and profitability of enterprises are related to capital management, such as how to reduce inventory is an extremely critical issue in management. One of the main purposes of reducing inventories is to revitalize funds.

In order to obtain more funds for the development of enterprises, bank loans are the only way for almost every enterprise, but the interest on bank loans has caused the financial costs of enterprises to rise sharply. Even joint-stock enterprises can raise a large amount of funds through the open market, but in the face of the capital market, there is still a problem of return on investment. How to balance the relationship between own funds and borrowed funds is a major issue faced by enterprises.

On the one hand, enterprises need to maintain appropriate liquidity to meet the maturity of debts, and on the other hand, they must effectively reduce the cost of capital tie-up.

How the company plans the use of borrowed funds is more conducive to the development of the enterprise.

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Capital is always the blood of the enterprise, is the basis for its existence and development, but not the larger the funds retained by the enterprise, the better, the enterprise can retain a certain amount of funds, the key is to speed up the turnover of funds to improve economic efficiency Fund management (treasury) is an important part of financial management. Many issues around the survival, development and profitability of enterprises are related to capital management, such as how to reduce inventory is an extremely critical issue in management. One of the main purposes of reducing inventories is to revitalize funds.

In order to obtain more funds for the development of enterprises, bank loans are the only way for almost every enterprise, but the interest on bank loans has caused the financial costs of enterprises to rise sharply. Even joint-stock enterprises can raise a large amount of funds through the open market, but in the face of the capital market, there is still a problem of return on investment. How to balance the relationship between self-owned funds and borrowed funds is a major issue faced by enterprises.

On the one hand, enterprises must maintain appropriate liquidity to meet the maturing debts, and on the other hand, they must effectively reduce the cost of capital tie-up.

The cost of capital paid by enterprises borrowing funds is lower than that of using their own funds for the following reasons:

1.Borrowing rates are usually lower: External financing sources, such as bank loans or bond issuances, are usually lower than the company's own equity or internal financing. This means that businesses can get the money they need to dismantle the hunger at a lower cost.

2.Financial leverage: When a business uses borrowings to invest, its earnings may exceed loan interest expenses. In this case, the company is able to increase shareholder returns through financial leverage.

3.Tax benefits: In some countries and regions, businesses can enjoy tax credits for interest expenses paid. This also makes borrowing funds more economical than using your own funds.

It is important to note that when choosing whether or not to use external financing, it is also necessary to consider the risks and expenses associated with it and make the most appropriate decision based on the company's specific circumstances.

Borrowing financing refers to the borrowing of funds from banks or non-bank financial institutions, in the form of long-term loans and short-term loans. Loan financing is one of the main financing methods used by enterprises to operate with debt.

Long-term borrowing financing is actually the raising and management of capital that can be used by the enterprise for a long time (usually more than 1 year).

Advantages of long-term borrowing financing:

1) Fast fundraising.

Raising long-term funds through the issuance of various ** requires ** pre-issuance preparation time and issuance time, while bank borrowing generally takes a shorter time than issuance ** and can obtain funds quickly.

2) Lower cost of capital.

The interest on long-term borrowing can be paid before tax, and the handling fee for borrowing is lower than the issuance fee of **. As a result, the cost of capital for long-term borrowing is the lowest compared to other long-term financing methods.

3) Elasticity.

The borrowing enterprise faces the bank rather than the majority of bondholders, and can have direct contact with the bank to determine the timing, volume and interest of the loan; In addition, if there is a change in the situation during the borrowing period, the enterprise can also negotiate with the bank to modify the amount and terms of the loan, etc., which has greater flexibility compared with other financing methods.

4) Have financial leverage.

Because the interest on bank borrowings is a fixed financing cost, when the EBIT increases, the after-tax profit will increase by a larger margin.

Disadvantages of long-term borrowing financing:

1) The financial risk is large.

Because of the effect of financial leverage, when the EBIT decreases, the after-tax profit will be reduced by a larger margin; In addition, borrowing will increase the pressure on enterprises to repay their principal and interest.

2) There are many restrictive clauses.

There are a number of restrictions on long-term bank borrowing, which may restrict the company's business activities, including fundraising and investment activities.

3) The amount of funding is limited.

Banks are generally reluctant to make large long-term loans; In addition, when the business is in a bad financial state, the interest rate on borrowing will be very high, and it will not even be possible to get a loan at all.

Answer]: C This question examines the method of fundraising.

Among the financing methods of enterprises, the use of retained earnings is an important way for enterprises to obtain their own funds;

Bank borrowing is a financing method for enterprises to raise short-term or long-term debt capital from banks and other financial institutions in accordance with the loan contract;

Bond issuance refers to the financing method in which an enterprise directly raises funds through the sale of bonds in accordance with the bond issuance agreement to form the debt capital of the enterprise;

Absorbing direct investment refers to the way of financing and signing an agreement with the investor through negotiation, the financing party directly raises equity capital, and the investor enjoys a certain ownership of the enterprise, and enjoys the corresponding benefits and bears the corresponding risks.

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