Methods of financing the enterprise

Question 1

Methods of financing the current activities of the financial market.

Answer 1

1) Profit
2) Bank loan
3) Non-bank loans
4) Trade credit
5) Issuance of short-term debt securities
6) Factoring and forfaiting
7) EU funds

Question 2

Loans from non-banking institutions. How do they do it and what do they use it for?

Answer 2

1) Mikrofinansowanie
• Small loan amounts
• Intended for entities that cannot use the banking market
• High-interest rates
2) Loan funds
• Financing of projects supported by local governments
• Financing of projects that have won EU tenders
• Low-interest rate

Question 3

Trade credit

Answer 3

• Deferral until payment
• It does not have to bear interest
• Does not require a specific legal form

Question 4

Short-term debt securities

Answer 4

• Non-financial corporations may issue them
• Low cost of raising capital
• High minimum emission value

Question 5

Factoring and forfaiting

Answer 5

• Purchase of receivables
• Factoring – applies to current assets – short-term transactions
• Forfaiting – applies to non-current assets – long-term transactions
• Factor or forfaiter takes over the buyer’s debt
• Szyki but high-interest money

Question 6

Guarantees and Sureties

Answer 6

Guarantees
– provided by banks
Sureties
– granted by surety funds

Question 7

Leasing

Answer 7

• Method of financing fixed assets
• The company pays leasing installments in exchange for the possibility of using
• Lessee – a company that uses assets
• Lessor – a company that puts assets into use
• Financial lease – the subject of the lease is included in the financial components of the lessee
• Operating lease – the subject of the lease is included in the financial components of the lessor

Question 8

Financing mezzanine

Answer 8

• One-time repayment at the end of the period
• The financing institution receives interest depending on how the company develops
• Beneficial for innovative companies and entities that want to buy out the company

Question 9

Private equity

Answer 9

Private equity
• Capital entries in companies that are not listed companies
• Financing of high-risk projects
• The goal is to increase goodwill and resell shares

Question 10

Venture capital

Answer 10

• Financial entries into startups
• The investor is a venture capital fund
• The goal is to increase goodwill and resell shares

Question 11

Business Angels

Answer 11

• Capital entries in startups
• Private investor, not fund (as in venture cappital)
• Often associated with the desire to support the development of a specific industry

Question 11

Crowdfunding

Answer 11

• The community finances selected projects
• A large amount of small subsidies
• Different forms of remuneration for participants