Brief Analysis Of Indirect Financing Method

open debt financing It refers to publicly issuing bonds on the stock market, including domestic corporate bonds, short-term financing bonds and corporate bonds that will soon be released. The advantages and disadvantages of issuing bonds lie between listing and bank borrowing, and it is also a practical means of financing, but the key is to choose the right time to issue bonds. The timing of debt issuance should be fully considered in anticipation of the trend of future interest rates.

There are many kinds of bonds, and there are common corporate bonds and corporate bonds and convertible bonds in China. Corporate bond requirements are relatively low, and corporate bond requirements are relatively strict. Listed company The limited liability companies established by two state-owned investment entities can only issue their qualifications, and have strict restrictions on the assets and liabilities ratio and capital of enterprises.

Convertible bonds can only be issued by key state-owned enterprises and listed companies. The advantage of issuing bonds is that the repayment period is longer, the additional restrictions are less, and the cost of capital is not too high. But the procedures are complex and strict with the enterprises. Moreover, the bond market in China is relatively light, the trading is not active, and the risk of issuing is great, especially the long-term bonds, which are faced with higher interest rate risk and lack of risk management financial instruments. At present, it is difficult for private enterprises to obtain debt financing through open channels, mainly considering non public debt financing.

Non public debt financing includes bank loans, government loans, trust loans and corporate and personal loans. Bank loans are banks operating as the main body, operating according to credit rules, requiring asset safety and capital return, and the risk depends on asset quality. Because of the long chain of responsibility and long period of information and asymmetric information, credit financing is dominated by a small number of decision makers to decide the project's large sums of money and push the risk accumulation to the future.

　　 Credit financing It needs support from the developed social credit system. Bank borrowing is the most commonly used financing channel for enterprises, but the basic practice of banks is to "care for the poor and love the rich" and take risk control as the principle, which is determined by the nature of the bank's business. For banks, it generally does not want to take too much risk because bank borrowers do not have the right to claim profits, so they are unwilling to borrow money from risky enterprises or projects, even if they have very high expected profits. On the contrary, enterprises with strong strength, income or cash flow stability are welcome loans from banks.

Because of the above characteristics, bank loans are mainly compared with other financing methods: first, harsh conditions, too many restrictive clauses, too complicated procedures, time-consuming and laborious, and sometimes they may not run for a year; two, the borrowing period is relatively short, and the long-term investment is very small to loan money; three, the loan amount is relatively small, so it is very difficult to solve all the funds needed by the enterprise to solve the problem through the bank. Especially for start-ups and start-ups, it is difficult to obtain bank loans because of the large risk of loans.

A trust loan is a loan issued by a trust institution to the units and projects approved by itself within the limits prescribed by the state. The trust loan can be divided into two categories according to whether the client requests specific requirements: trust group A and B type trust loan; with the purpose of loan, it can be divided into fixed assets trust loan, liquid fund trust loan and temporary revolving trust loan.