What are the financing channels for enterprises?

When the company's development is limited by funds, many companies solve the difficulties through financing in order to make the company develop normally. So, what are the channels for corporate loans?

From the source of capital allocation, capital allocation channels can be divided into internal channels and external channels.

1, internal financing channel

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Internal capital distribution channel refers to the development of capital sources from within the enterprise. There are three sources of funds within an enterprise: its own funds, taxes and interest payable by the enterprise, and unused or undistributed special funds of the enterprise. Generally speaking, in enterprise merger, enterprises try to choose this route. This method has good confidentiality and low risk, but the source of funds is related to the profits of enterprises.

2. External financing channels

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External financing channels refer to the sources of funds developed by enterprises from the outside, mainly including professional bank credit funds, non-bank financial institutions funds, other enterprise funds, private funds and foreign capital. Due to the advantages of high speed, flexibility and large amount of funds, external capital allocation is generally the main source of capital allocation in the process of procurement and acquisition. But its disadvantage is poor confidentiality, and enterprises need to bear higher costs, so it will produce higher risks. Pay attention to it during use. The financing method of borrowing mainly refers to financial institutions (such as banks), and its cost is mainly interest liabilities. Interest on bank loans can generally reduce corporate profits and pre-tax corporate income tax. There is a lot of room for financing non-financial institutions and enterprises, but due to low transparency, the state has restrictions. From the perspective of tax planning, enterprise borrowing is the best effect of decomposing funds among enterprises.

3. Corporate financing channels