2. The main channels of equity capital are self-owned capital, relatives and friends or venture capital companies. In order to improve the operation or expand the scale, the franchisor can use various equity financing methods to obtain the required capital.
The role of equity financing:
1. The funds raised by equity financing are permanent, have no maturity date and do not need to be returned. Project capital is the minimum capital demand to ensure the project legal person and the basic premise to maintain the long-term stable development of the project legal person.
2. There is no fixed pressure to repay the principal and interest on schedule, and whether to pay dividends or not depends on the actual operation effect after the project is put into production, so the financial burden of the project legal person is relatively small and the financing risk is relatively small.
3. It is the basis of debt financing. Equity financing is the most basic source of funds for project legal persons. It embodies the strength of the project legal person and is the basis of other financing methods, especially to provide protection for creditors and enhance the company's borrowing ability.
Extended data:
Equity financing mode:
1, IMF, by means of fake stocks and secret loans. As the name implies, the so-called fake stock secret loan means that investors invest in projects in the form of shares, but actually do not participate in project management. Withdraw from the project at a certain time. This method is mostly adopted by foreign funds. The disadvantage is that the operation cycle is long, and it is necessary to change the shareholder structure and even the nature of the company.
2. Bank acceptance bills. The investor will transfer a certain amount, such as 1 billion yuan, to the company account of the project party, and then immediately ask the bank to open a bank acceptance bill of 1 billion yuan. Investors take away bank acceptance bills. One of the biggest drawbacks of acceptance is that according to national regulations, bank acceptance can only last for 12 months at most. Most places can only be opened for half a year. That is, the fee must be renewed every 6 months or 1 year.
3. Direct deposit. This is the most difficult financing method. Because direct deposit is against bank regulations, the relationship between enterprises and banks must be particularly good. The investor shall open an account in the bank designated by the project party and deposit the specified amount into his own account. Then sign an agreement with the bank. Promise not to misappropriate the money within the specified time.
4. Bank letter of credit. The state has a policy that a bank letter of credit issued by a global commercial bank (such as Citigroup) that agrees to finance an enterprise is regarded as having the same amount of deposit in the enterprise account. Only wholly foreign-owned enterprises and Sino-foreign joint ventures are allowed. Therefore, if domestic enterprises want to raise funds in this way, they must first change the nature of the enterprise.
5. Entrusted loan. The so-called entrusted loan means that the investor sets up a special fund account for the project party in the bank, then transfers the money into the special fund account and entrusts the bank to lend money to the project party. This is a relatively easy way of financing. Usually, the audit of the project is not very strict, and the bank is required to make a commitment to collect interest and repay the principal from the project party every year.
6. Direct payment. Direct payment means direct investment. Such strictly examined projects often require fixed assets mortgage or bank guarantee. Interest is also relatively high. Mostly short-term. The minimum personal contact is 18 annual interest. Generally above 20.
7. Hedge funds. There is a kind of entrusted loan in the market that does not repay the principal and interest, and it is a typical hedge fund.
8. Loan guarantee. More investment guarantee companies in the market can obtain much-needed funds by paying higher interest than banks.
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