When there are business expansion projects that require capital to leverage growth, it is necessary to obtain fresh resources, which can be obtained through equity, financial debt and mezzanine:
- Equity: It consists of issuing common or preferred shares, obtaining in exchange cash to strengthen the statement of financial position (balance sheet). This source of financing is costly but flexible since it does not involve the payment of predetermined flows such as financial interest.
- Financial Debt: It can be obtained from banks, private equity funds, individuals or by issuing bonds. Contrary to common perception, it is the most economical source of financing since it generates tax shields and is less costly than the incorporation of new partners.
- Mezzanine: It is a hybrid between equity and financial debt, it is a modern and little known source of financing in our environment that allows raising capital under very flexible conditions that can generate a lot of value for both the recipient and the provider. An example of this source of financing is debt convertible into shares.
- Other sources: There are some other sources that may be interesting from a tax point of view such as operating income from assets.
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