1. Long-term funds can be obtained by issuing bonds. Bonds are long-term liabilities, usually with a term of more than one year, which can meet the long-term capital needs of enterprises.
2, issuing bonds can get lower capital cost. Bonds are usually issued at a fixed interest rate. Compared with other financing methods such as stocks, the interest expenses of bonds are more tax-saving, so the capital cost of enterprises can be reduced.
Issuing bonds can increase the company's capital strength. Issuing bonds can increase the company's capital, thus improving the company's capital strength and credit rating, which is conducive to the company's future development.
4. Issuing bonds can reduce financial risks to some extent. Compared with equity financing, the financial risk of bond financing is lower, because the principal and interest payment of bonds is the fixed expenditure of enterprises, and there will be no uncertainty and variability like equity dividends.
5. Issuing bonds can improve corporate governance. Bondholders can supervise and restrain corporate governance through the terms of bonds, thus promoting the improvement of corporate governance.
There are many ways for enterprises to raise funds. The following are some common ways to raise funds:
1. Equity financing: Equity financing refers to enterprises raising funds from investors by issuing stocks. The advantage of equity financing is that it can obtain long-term funds, increase the company's capital strength and improve the level of corporate governance. However, the financial risk of equity financing is high, because the dividend of equity investors is uncertain and there is a risk that the company will be acquired.
2. Debt financing: Debt financing refers to enterprises raising funds from creditors by issuing bonds and borrowing. The advantage of debt financing is that it can obtain lower capital cost and reduce financial risks. However, the financial risk of debt financing is high, because interest and principal need to be paid regularly. If the company is not well managed, it may face the risk of default.
3. Government subsidy: Government subsidy means that enterprises get financial support from the government by applying for government projects and funds. The advantage of government investment is that the cost of capital is low and it can gain the trust and support of the government. However, the application process of government funding is complicated and needs to meet the government's policies and requirements.
4. Commercial credit: Commercial credit means that an enterprise obtains commercial credit support such as commercial credit loans and commercial bills through cooperation with suppliers and customers. The advantage of commercial credit financing lies in the low cost of capital and the support and trust of business partners. The loan period of commercial credit financing is short, and it needs to be repaid on time and pay interest.