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Financing can be either Long-
term or short-term funds.
Shortterm is debt scheduled to
be paid within a year while
long-term is debt to be paid in
more than a year.
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Debt Financing
Is being done through borrowing, whether
short-term or longterm, and it usually
comes with interest. This, together with
other charges, is referred to as the cost of
borrowing or cost of debt.
Common debt financing arrangements
include bank loans, issuance of debt
instruments like bonds, financing from
nonbank institutions like lending
companies and cooperatives, assignment of
accounts receivable, and selling of notes
receivables.
In here, there exists a borrower-lender
relationship. In the case of banks and other
nonbank institutions, borrowing entails
compliance of certain requirements.
- refers to the sale of ownership interest,
most often represented by shares, to raise
fund for business purposes.
-To compensate for the use of funds from
equity financing, dividends or profits shares
has declared, set aside, and paid by the
business.
Common Equity financing arrangements
include funds raise by the entrepreneur or
business owner from friends and family,
capital infusion through direct sale of
shares or through initial public offerings,
and financing by private companies. In
here, there exists an investee-investor
relationship.
Short-term financing is debt scheduled to
pay within a year while long-term financing
is debt paid in more than a year.
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1. Cooperative banks and credit cooperative are just the same.
2. All cooperative in the Philippines regulated and supervised by the
Cooperative Development Authority.
3. By resorting to debt financing, business ownership has kept and
maintained.
4. One of the aims of cooperatives is to provide goods and services to
its members to enable them to attain increase, savings, investments,
productivity, and purchasing powered income, and promote among
themselves equitable distribution of net surplus through maximum
utilization of economies of scale, cost sharing and risk sharing.
5. Capacity refers to the applicant’s net worth, which can be
arrived at by deducting total liabilities from total assets.
• Acquisition of equipment
• Franchise of a fast-food outlet
• Purchase of inventory for a clothing shop
• Loan for agricultural needs (ex. Palay production)
• Loan for purchase of a commercial space
• Auto-loan
• Housing loan
• Emergency loans
• Development of a subdivision
• Loan for sari-sari store supplies