Funding Source Concept
Funding sources designate the set of the organizations’ internal and external capitals used for funding of the performed investments.
In the decision of which funding source to use, the first big choice it’s about if the funding should be external or internal. In this option should weigh, among other questions, the loss or gain of financial autonomy, the easiness or possibility of access to the funding sources and the financial cost (interest) of that funding.
Main funding sources available:
- Self funding: corresponds to the financial funds released by the company’s activity.
- Increase of equity: corresponds to the increase of the company’s equity by new capital entries from the actual or new partners or shareholders.
- Other equity: corresponds to the resource to external entities for obtaining the capitals needed to meet the investments such as: bank credit, leasing, assets suppliers’ credit, and shareholders supplies, among many others.
- Investment funding incentives: corresponds to several support programs created by the State to encourage the investment and competitiveness.
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