There are two types of long-term financing of the Company, which are Own or internal Financing and External or External Financing. Then in this article we will talk about all of them so that readers have knowledge of what these sources of long-term financing are, where to request them and what each of them is used for.


1.- Own or internal financing . Own financing is provided by the company and the partners themselves in the form of Social Capital when they constitute the company or when they subscribe a capital increase and internal financing is generated through the activity of the company and which are benefits that they are not distributed and reinvested in the company in the form of Legal or Voluntary Reserves or by means of the provision of expenses for the Accumulated Amortizations of the Fixed Assets and by the provisions for Provisions for future foreseeable and feasible expenses or losses, which are endowed to cover said contingencies and to recapitalize the company.

2.-External or external financing. Are those funds that come from external sources outside the company and can be of different types depending on where they come from, such as: Traditional Banking Financing, Financing through Organized Markets, Financing through Public Entities and Bodies and Financing through another types of alternative financing channels such as Crowdlending, etc.

The financing coming from Credit Institutions, are those that come from entities that we know as Banks, Savings Banks and Credit Cooperatives, which are financial entities that offer financing to companies of many types, but in this article we are going to focus on Long-term financial products whose repayment term is greater than one year.

7 Long Term Financial Products

1.- Long Term Loans. The financial institution lends the company a certain amount of money, with personal or real guarantee (mortgage), for a specific period of time and at an interest rate agreed by both parties. The loans are usually used for expansion investments, purchase of investment goods or the launching of new business projects. There are many types: loans for export projects, for the acquisition of fixed assets, for the expansion of production facilities, etc.

There is also the possibility of obtaining financing through the presentation of investment projects to the Entities and Public Bodies that study them and if the requirements are met, they can grant you an Aid can be non-refundable, with partial or total refund. Subsidies are grants and may be to capital, to finance investments, or to the activity and are granted by the local, community or state Administration.

Some entities that process and manage the grants and subsidies are the ICO ( Official Credit Institute ), the CDTI ( Center for Technological and Industrial Development ) or ENISA ( National Innovation Company ) and in all the Autonomous Communities and City Councils .

2.-Financial leasing: It is a type of financing in which the lessor agrees with the lessee through a leasing contract, the right to use an asset in exchange for the payment of monthly installments for a period of time exceeding one year. and that, at the end of it, the lessee can return the good or pay the residual value and keep it. With the leasing contract you acquire the right to use, but the property does not, until you exercise the option to purchase at the end of the contract. This is usually a good form of financing to start the business, since it allows you to finance yourself initially without having to spend large amounts of money.

3.- Operational leasing or Renting: In this form of financing the figure of the distributor disappears, so that the one that puts the good in disposition and the one that collects the monthly installments is the same entity. In this case the thing works as a Long Term rent, in which the property of the property is not ours but for its use we pay a rent in the form of installments and that go to the expense account of the company directly and that are fiscally deductible. The Renting company takes care of maintenance, repairs, replacements, taxes and everything necessary to make everything work perfectly. When the contract ends, you have to return the good object of Renting and you can exchange it for another with the same characteristics, signing a new contract for Renting.

4.- Company promissory notes: The company issues a mercantile document, which is a credit instrument with a commitment to pay in writing and a certain term and for a certain amount of money. The promissory note guarantee is the company that issues them and is a product with a high security of collection since they are usually issued by large companies. If a default occurs, a Notarial Protest should be made and legal actions taken to claim the amount of the promissory note plus the corresponding expenses.

5.- Issuances on the Stock Exchange and other Organized Markets : Like the MARF, Alternative Fixed Income Market or the MAB, Alternative Stock Market , which are born to provide financing to small and medium-sized companies. On the stock exchange, the company can obtain financing by issuing shares on the stock exchange and thus obtain fresh resources for the expansion of its activity. To do so, it must comply with a whole series of very cumbersome requirements that are controlled by the CNMV (National Securities Market Commission).

6.- Obligations and Bonds . They are also titles that represent aliquots of a private debt that the company assumes against the bondholders or bondholders who acquire it and who are the ones who lend their money in exchange. The obligations have a long-term maturity over 5 years, while the bonds are usually issued with a maturity period of between 18 months and up to 5 years. In order to issue Obligations and Bonds, a series of fairly severe requirements have to be met, so this type of financing is only indicated for medium and large companies. They usually subscribe to investors who like the term lake and who want to invest their savings with full guarantees in solvent companies to guarantee the return on investment.

7.- Crowdlending. This is what is known as crowdfunding and consists of a massive financing of small investors who contribute their money as an investment or loan to return with interest (Crowdlending). Normally it is usually a Short Term, but there are also financing for more than one year, 36 months, for example. For those who are more interested, please read this article where we explain