Faced with the need to generate enough cash for investments leading to growth or cost savings, companies, organizations or institutions usually look for external sources of funding. Sources and types of funding depend on the type and the status of potential fund receiver. In most cases they include both public and private types of finance.
Public sources of funding
It is possible to get access to public type of funding like subsidies or loan guarantees with no repayment obligation for companies at different company development stages covering different types of investments, including R&D, investments into manufacturing equipment, environmentally friendly technologies, HR development, improvement of business processes and other areas. These are mainly coming from the European Union Structural funds or programs like Horizon 2020. These funds are set by law and have an aim to achieve wider impact for the European or national economy and society. In almost all cases these funds are provided on a competitive basis. Also, they are easier to access, there is more public information about them, and they use standard procedures and application forms. The funds are also largely available for non-profit organizations and public institutions.
Private financing for companies
Private financing comes mainly through equity or debt financing or a mixture of both depending on the stage of development of the companies. Equity capital is raised by the company in exchange to ownership of part of the company’s shares. This type of financing helps to finance earlier stages of company development without attaining debt that needs to be repaid, but with incurring obligation to share company’s profits. After initial stages, when company achieves good levels of profitability it can consider debt financing option.
Typical private funding for companies include the following phases based on the stage of development of the company (see Figure below):
Figure. Financing stages
Importantly, equity and debt financing is also support by the public funds, while aiming and faster development of private equity markets in different countries.
We, at ProBaltic, are eager to help accessing the best possible public or private funds that would satisfy the needs of our Clients as well as financing public or private entities. To this end, if the Client is eligible for finance, we:
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