In the economic sphere, the term financing is used to refer to a set of monetary or credit means, generally destined for the opening of a business or for the fulfillment of a project, either at a personal or organizational level. It is important to note that the most common way to obtain financing is through a loan.
Loans can come from companies or individuals, or by the most traditional way, which is through bank loans. Nowadays it is very common for people to seek financing through the use of credit cards. This type of loan or financing allows the individual to pay at the end of the month, a minimum installment or the amount that he decides to establish for the payment of his debt. However, great care must be taken with this type of financing as it can lead to many problems if it is not used with measure.
Today financing is not only used by individuals or companies, but also national, regional and municipal government entities proceed to adopt this alternative in order to be able to materialize any public project, such as the construction of roads, construction of hospital centers, among others. It should be noted that financing may also be required to alleviate an economic deficit that prevents the payment of certain obligations contracted.
At the business level, different sources of financing are presented, some of them are:
Short-term financing: in this type of financing, the term of the loan is less than one year. For example bank loans.
Long-term financing: the term to cancel is greater than one year, or there is no obligation as such to return the money. An example of this kind of financing is made from funds from relatives or friends.
Internal financing: it is obtained from available resources of the company. Eg Amortizations, reserve funds, etc.
External financing: they come from people who do not belong to the company. eg: bank loans.
