Borrowed funds are a luxury or an indispensable measure? Attracting borrowed funds

Sometimes the company does not have its own funds , so businessmen have to borrow. With their help you can increase production, pay off debts and get additional profit. Borrowed funds are those that do not belong to the borrower and are provided for temporary use.

The borrowed funds include:

• Commercial loans and bank loans, loans.
• Leasing.
• Factoring.
• Other borrowed funds.

In addition to borrowed funds, the enterprise can use and attracted. Unlike the first, they do not return. These include state funding at no cost, equity shares.

Debt to Equity Ratio

It is important to ensure that your own and borrowed funds are in balance. It is necessary to define a clear strategy of action, which will be used in case of unforeseen circumstances. When raising borrowed funds, there is a certain threshold of losses. If we go over it, it is unlikely that the business will be restored, and the enterprise will be bankrupt.

The loan and equity ratio will help control the situation. It is calculated as follows: the total amount of loans and interest on them must be divided into future incomes and total assets. The value of the coefficient will become a fundamental indicator when granting a loan: the lower it is, the more likely it is that funds will be received.

The attraction of borrowed funds is more expedient to carry out in the event that the enterprise stably functions and brings the income. A businessman who wants to take financial assistance should thoroughly study this segment of the market and have a good understanding of the intricacies and nuances of his business.

Borrowed funds are those that are attracted by the enterprise for a certain period of time and on specific terms.

The organization can obtain borrowed funds as follows:

• Take a loan of any kind.
• Receive from individuals and legal entities, regardless of the form of clearance.
• Use own debt obligations.

From an economic point of view, borrowed funds are a necessary source for the creation of assets, but from a legal one - the debt of the enterprise. Liabilities can be short-term or long-term.

That the work of the organization was effective, the borrowed funds of the enterprise should be used, given an acceptable level of risk. It is also necessary to take into account the specifics of the activity and the features of the production and commercial cycle.

The borrowed funds of the enterprise, received for a long period, are used when there is a sharp shortage of finances, which leads to a rapid drop in incomes. But for a borrower such a service is not very profitable: maturity is at least 12 months. In addition, the organization must submit a regular report on the movement of its own funds.

Accounting of arrears

According to the law, the organization has the right to choose the way to record long-term debts. There are two options:

• Accounts are borrowed funds, the repayment period of which is more than 12 months.
• Long-term debt is transferred to a short-term debt, when the contract until the return of money remains 365 days.

In the accounting policy of the enterprise, the chosen method should be reflected.

Accounting for term and arrears

When accounting for borrowed funds, it is necessary to remember that the accounting of urgent and overdue debts is conducted separately. Urgent is the debt, the maturity of which has not yet come or is extended. If the repayment period, according to the contract, has already expired, we can speak about the overdue debt.

To transfer the urgent debt to the overdue one is necessary on the day when the borrower was obliged to repay the debt. Separate accounting, as a rule, is organized in separate sub-accounts, which open to account 66 (67).

Interest is accrued according to the terms of the loan agreement. Debt is displayed at the end of the reporting period.

Other borrowed funds

According to the law, borrowed funds of the enterprise may have other forms of attraction. These include placing the borrower obligations through the issuance of bills and the issuance of bonds.

How to get an interest-free loan?

To date, lending is quite a popular service. The competition in this sphere is so great that banks try to attract customers with favorable conditions. An interest-free loan is in special demand.

To get a loan without interest, you need to have an excellent credit history and collect all the documents. As a rule, this is a passport and identification code. Sometimes you need a certificate of income. If the borrower wants to take a large amount of money, you need to take care of the guarantors. All other nuances should be clarified in the financial institution that will issue the loan.

Credit organizations are not allowed to provide money at 0% per annum, so the rate will be approximately 0.05%. Also in the contract can be written about the monthly payment for the service of a loan or the presence of a commission.

Forms of bank loans

In the event that borrowed funds are a necessary measure, it is necessary to determine which loan is more appropriate to take. The options can be the following:

• If the need for funds is not constant, you can take limited loans. They will be used to finance a stock or stock of finished products.
• When it is necessary to finance the elements of fixed capital, it is more expedient to get the full amount.