Companies use several types of financing options in the course of their business operations. Medium term financing may be used for special projects or business expansions that will result in new production facilities.
The most popular financing for businesses are bank loans. Loans can be obtained for any amount and carry special terms for funding, length and repayment.
Leasing is an attractive financing option for companies needing equipment or facilities for a certain length of time. Lease generally range from one to three years, giving businesses options outside of traditional bank loans.
Large companies may issue business bonds to gain financing for medium-length projects. Although this increases leverage, bonds do not dilute ownership levels or give outside individuals a vote in business operations.
Small companies may provide medium term financing through deposits of owner capital. Large companies may issue stock on a medium term plan for generating new capital for business financing.
Venture capital financing is generated by offering outside investors an ownership stake in the business for their invested capital. This allows these outside individuals a vote in how the business is managed, which may be seen as a significant drawback to this type of financing.