The Future of Equipment Leasing Companies

The future of equipment leasing is strongly hand in hand with company advancement, little, large and everything between.

Equipment leasing is synonymous with possibilities and exactly what service does not take advantage of possibilities? Devices leasing offers companies: Financial Options, Growth or Expansion Options and Business Potential.

Equipment leasing is tax deductible, whereas initial big investments are deductible the very first year however just a portion thereof is after that. The future of devices leasing is in the monetary choices they use to businesses, small and large.

Development & Expansion Options – Small companies and the self-employed may find their growth and growth options limited without the options devices leasing can supply them. From building and construction to accounting to medication, devices leasing supplies a future for both. The rapid development industry for devices lessors is matched just by the needs of lessees.

Exactly what a business requires more than anything else is capital to invest not just in themselves, but likewise their future. Devices leasing keeps the capital in their pockets and helps doctors, engineers, computer system specialists and even authors establish their businesses. The future of devices leasing is connected securely to the plan that is the American Dream.

Company Potential – While financial, development and expansion alternatives are certainly part of the future of equipment leasing. There is an untapped source that will discover its future in devices leasing. That source is the business potential in the entrepreneur. A growing number of business entrepreneurs are leaving the wildly busy business world to begin their own service.

There are a lot of trepidations when you go into service for yourself. Beginning a service can be a threat for the individual and the family. Devices leasing can help a business owner decrease their risks, prepare for a future and handle unpredicted scenarios.

Devices leasing can be the difference between being and achieving a dream stuck in a dead-end task. There is a rise in the growth of small business in the country, concentrating on personal services from web building to direct marketing to selling homemade clothes. Devices leasing can make all those possibilities happen and for portion of the cost it would take to buy the devices outright.

Farmers and Other Opportunities – There’s a lot of focus placed on devices leasing for personal doctors, medical practices, building business and computer and Internet technologies. Another untapped market that benefits from equipment leasing is farmers that work large and little farm operations. Equipment leasing can keep the small farmer moving on a tractor or helping to reconstruct a damaged barn.

Big equipment like tractors, backhoes, ditch witches and scoops are a substantial financial investment. Farms are a difficult operation and take a great deal of backbreaking work and labor investment. When a piece of heavy devices breaks down, farmers have an option to repair it or do without. If they can’t affect the repair works themselves or afford them, then it is more than likely they cannot afford to go out and buy a new one. Equipment leasing would supply the farmer not just with the equipment to obtain the task done, but likewise to the upkeep assistance without the huge output of cash.

The future of devices leasing has been around, market and primarily people. It only takes a small financial investment to get begun which little investment returns the dividends to the lessee as their organization and monetary opportunities grow.

The future of devices leasing is firmly hand in hand with company advancement, small, big and whatever in between. Devices leasing provides businesses: Financial Options, Growth or Expansion Options and Business Potential.

The future of equipment leasing is in the financial options they use to organizations, big and small.

Devices leasing can make all those possibilities take place and for fraction of the cost it would take to buy the devices outright.

Equipment leasing would supply the farmer not just with the equipment to get the job done, but also to the upkeep support without the big output of cash.


Financing for Start-Up and/or Growing Businesses

Factoring is one of the earliest financing options ever created.

The history of factoring go back to the days of lenders in the middle ages. Factoring has actually been the working capital facility of choice in Europe for centuries. It has handled a new life in recent years as a funding method for lots of companies in the United States.

Factoring is the sale of accounts receivable, rather than obtaining versus them as you would made with a bank line of credit. By selling your invoices, you create immediate cash flow instead of having to wait on your customers to pay.

Since of the lack of funding to support those sales, companies frequently discover themselves in the discouraging position of having sales chances which they can not accept. Banks usually can not provide sufficient financing for growth due to internal credit policies and external regulative restraints. Even if a service can certify, the bank line of credit might be completely inadequate to support the business’s sales development opportunity.

Primary benefits of factoring versus a bank line of credit:

– Factoring centers are a lot easier to carry out compared to acquiring a bank line of credit.

– Factors have more flexibility with regard to documents and credit issues than banks.

– Factoring can be started and terminated really effectively. When making a newbie purchase of invoices from a company, elements generally take one to 2 weeks to check the credit rankings of the clients and interact a discount rate cost.

– The company gets payment in cash from the factoring company after shipment and invoicing a client. Immediate billing payment eliminates the sale-to-collection business cycle; hence enabling companies captured in a cash crunch to acquire quick relief. Turn-around on the sale of receivables is only about 24 hours.

– Factoring is a sale of possessions (billings), not a loan. For services that either can not qualify for standard financial obligation funding or that merely do not want to incur more debt; factoring readies option methods of financing working capital.

– Factors purchase all rights in the invoices and the seller has secondary liability for any invoices not collected.

The elements undertake financial obligation collection, but business stays eventually responsible to repay any portion of the money rate attributable to an account that went uncollected. Factoring can be a reliable solution to moneying a short term gap in cash flow for the start-up or quickly growing service.

Factoring is one of the oldest approaches of organization financing in presence. Even if a service can qualify, the bank line of credit might be totally inadequate to support the business’s sales development chance.

– The company gets payment in money from the factoring company after delivery and invoicing a consumer. Immediate billing payment gets rid of the sale-to-collection service cycle; therefore allowing services caught in a cash crunch to get fast relief.


How Big is a Small Business?

Small company is a term that is utilized day-to-day. But what does it really mean?

Since in the previous years the increase of small service has been bigger than in any other decade prior, that is. This is largely due to the increasing number of services that are available to small business owners, to enable them to keep their business running.

There really isn’t really any guidelines for when the term small company is utilized, nevertheless it is merely specified as a company which has a small number of employees. How couple of workers is arguable, and the definition of when an organization changes from a small company to a bigger corporation differs both by country and market. This number is usually less then 100 workers.

As pointed out prior to small companies due to their nature, are in the majority of times sole proprietorships, partnerships, or privately owned. Typical in may countries, small companies, are most often related to: accountants, restaurants, guest houses, photographers, small shops, hair stylists, trades persons, solicitors, legal representatives, small-scale manufacturing etc

. Small businesses in often cases are located in personal houses, for two primary factors. The first is since it is economical and for the most parts practical. The 2nd factor is that there are a number of benefits with tax, etc for having your organization in your house.

Running a small company is an interesting endeavor, and an excellent method to introduce yourself into the business world, and to acquire company sense. If you have an interest in starting your very own small business, I would suggest having a talk with a local legal representative or accountant, who will be able to respond to concerns that specify to your area. All the best with your new venture!


Small Company Grants

Small companies are crucial to our country’s economy.

Why?  Do you realize they account for more than 50% of our GDP (gross domestic product)? And more than that, it is here that many new jobs are being continuously produced. If you occur to be part of this and, as an entrepreneur, you wish to expand your company however do not have the capital to do it, you might utilize a complimentary small business grants program. Maybe you have a service concept that has terrific potential, possibly you are at the crossroads where you just need to get and diversify into the next level as far as your organization is worried. But you do not have the money to obtain you there. Well, now you can get the cash if you really desire it.

Exactly what are free small business grants? These are grants provided by the home state when you require money to begin a service or to enhance it. All states do not offer complimentary small business grants. The ones that do are Nebraska, New Hampshire, Kansas, New Mexico and Utah. The others generally offer you loans or rewards and financial support. Some even provide technical training and funding to those who wish to begin their own small company endeavor. All it takes to get a complimentary small company grant is a little bit of legwork and a little effort.

The DHS or the Department of Homeland Security uses totally free small business grants to entrepreneurs who would like to start something associated to security. Through the Small Business Innovation Research (SBIR), DHS has an award for which United States business with less than 500 individuals can compete. Initially, $100,000 is provided to the small businesses in order to research to validate the technical, clinical and industrial worth of their principles. They get grants for the next two years to establish prototypes if their concepts are approved. The totally free small business grants are given up the locations of infotech and marine security and chemical and biological defense.

True the federal government will not provide you grants but it helps people wishing to start a small business. This is done through its assistance arm, the SBA (Small Business Administration). Through this, the United States offers small businesses appealing loans and technical assistance. However, no grants are offered to those who wish to start a service or want to grow their existing businesses. The SBA was started in 1953 and has actually been responsible for assisting so many thousands of Americans start up their own small company. SBA would like to reach the 25 million small businesses in the United States today.

Thinking about how much income small businesses are contributing today, it is vital that we provide the best assistance and support. Free small business grants are just an extremely little well-deserved part in it.

If you occur to be part of this and, as a business owner, you would like to broaden your service however don’t have the capital to do it, you might utilize a totally free small company grants program. Maybe you have a company idea that has fantastic potential, perhaps you are at the crossroads where you simply need to get and diversify into the next level as far as your business is worried. The DHS or the Department of Homeland Security offers free little business grants to business owners who would like to start something related to security. The free small organization grants are offered in the areas of info technology and marine security and chemical and biological defense.

No grants are given to those who want to start an organization or desire to grow their existing companies.


Prepare Home Based Business for Success

There are many ways to hedge for the success of your home business.

Even something as easy as your frame of mind can identify whether or not your home business will succeed. Here are a few pointers to assist make your home business measure up to its capacity.

In keeping with the concept that a positive outlook assists your home business, remember that not everything is as bad as it seems. When things with your home business are not going well, or you feel frustrated and prevented, continue. Maybe there is a new sale for your home business, or some other little favorable encouragement right around the corner.

Second, keep in mind that you can do nearly anything that you set your mind to do. With effort and determination, your home business can be all that you’ve dreamed it would be. Don’t let problems or individuals discourage you or get you to let go of your home business dreams. At the exact same time, don’t sit idle and expect your home based business dreams to take place without your help, either. Your effort, perseverance, and decision can trigger your home business to succeed in all the methods you’ve hoped.

Develop bridges with your home service customers and other colleagues by confessing when you are incorrect, making up for errors, and doing whatever it takes to earn their organization. In addition, in your house service, it is crucial to share credit with any other company partners or colleagues that have actually been part of something favorable.

4th, remember to make a note of the objectives for your home based business. It is a tested truth that a home based business, or any other endeavor, will get much farther toward the goal if it is made a note of. Make a home based business prepare for yourself. Exactly what do you wish to accomplish in your house service within the next year or two? What about five years from now? How can you make that take place? This is advantageous to your home based business, not just by triggering you to keep in mind your original objectives, however likewise by helping you to break down your hopes and dreams into smaller pieces of a home based business strategy.

In keeping with the concept that a favorable outlook helps your home company, remember that not everything is as bad as it appears. Build bridges with your house company customers and other associates by confessing when you are incorrect, making up for mistakes, and doing whatever it takes to earn their business. Additionally, in your home company, it is crucial to share credit with any other business partners or coworkers that have actually been part of something favorable. Carrying out these excellent house business practices will keep you in good standing with your consumers and business partners.


Finance, Credit and Investments

Finance, Credit and Investments- Part 4

Economical Course

We stopped at the definition of the investments in the capital work “economical course” for the special purpose, as, in it the author tried to discuss the concept of investments systemically and quite completely, herewith the book is published just now.

Changing native economical termini with foreign ones is purposeful, if it really matters (by keeping parallel usage of the native termini for the inheritance). We must not change native economical termini into foreign ones all together, when by ordinal traditional language easy to explain narrow and private concrete processes and elements get their own termini. The “movement” of these termini is approved in the narrow professional bounds, but their “spitting out” into the economical science may turn economical language into the tangled slang.

Except the termini “investments”, there are two more termini related with the investment. They are shown below.
” Human capital investment” – any activity provided for rising the workers labour productivity (in the way of growing their qualification and developing their abilities); at the expenses of improving the workers’ education, health and raising the mobility of the working forces”. It is very useful to use the mentioned termini, though it needs one correction: the human capital investments do not concern only workers, but also the servants, representatives of every kind of labour.

For today, in the most actual definitions, the capital investments are bounded only by financial means, when not only financial, but also the investment of natural, informational and material-technical resources takes place. Labour resources take an actual place in the investment process. They themselves fulfill this or that investment process.

Renewing.

Economical categories theoretically represent real, objectively existed productive relations. Generally, any educational process is fulfilled by the categories, which give opportunities for dividing the occasions and processes semantically, for expressing the definitions of a subject and realize their specific peculiarities and economic relations of a material world.

They apportion investment commodity, to which belong nonindustrial and industrial building objects, vehicles purposed for changing or widened technical park and the furniture, increasing others and reserves.

Widening;.

” Investment commodity, capital goods – a capital.”
In the official manuals of political economy of the reformation time the capital investments are discussed as “expenses for creating new main funds and widening, reconstruction and renewing the active ones”. In this definition the investments (capital placements) during separation of the forms (types) of further production of the main funds are bounded only by main funds (without increases of the circulation funds and insurance reserves):.

Human capital investment is “a specific kind of investments, mostly in education and health protection”.

As we’ve mentioned above, not long ago, in the well-known Soviet literature the concepts of “the placement of funds” and “investments” were accepted to be the synonyms and concerned to be investment of sources for further production of the main funds and formation of the turnover funds. We meet with such understanding of the concept of “investment” (here, they separate three types of the investment expenses: investments in the basic capital of investments, investments in the house building and investments in the reserves) in the modern economical publications and it is mostly used on the macro level during a statistical analyze of economical processes. In this concrete occasion investment is the category of reserve.

Reconstruction;.

” They call the total investments of production an investment product, which is directed towards keeping and increasing the basic capital (basic means) and reserve. Second consisting part of the total investments is represented by net investments – capital investments for the purpose of increasing basic means”.

We share wholly such definition, hence it follows that financial investments (if it is not followed by real investments as a result) do not increase real material wealth and real nonmaterial wealth. According to this context, the expression below is very important: “we must distinguish financial investments, which represent placement of the funds in the ways of selling and purchasing the securities for the purpose of getting profit and financial investments, which become cash and real, moved to real physical capital.”.

Our goal is exactly to substantiate investments – as an economical category and also, as a financial category in the narrow understanding.

You’ll meet below the definitions of investments from “the course of economy”: the investments are called “placements of fund into the basic capital (basic means of production), reserves, also other economical objects and processes, which request long-termed influxing of material and cash means. “According to the division of capital into physical and money forms, the investments too must be divided into material and cash investments”.

Here we apply for another manual thesis made by the academician Vasil Chantladze: “every financial relation is an economical one and every financial category is and economical one, but not every economical relation and economical category is financial relation and financial category”.

Compared with such definition of the investments (capital placement) the definition of investments in the dictionary attaching the “Economics” seems to be unimproved: “investments – the expenses of gathering production and industrial means and increasing material reserve”. Second consisting part of the total investments is represented by net investments – capital investments for the purpose of increasing basic means”.” Real investments are the investments in the economical branches and also, they are kinds of economic activities, which provide influxing the increases of real capital that is increasing material values of the industrial means”. According to this context, the expression below is very important: “we must distinguish financial investments, which represent placement of the funds in the ways of selling and purchasing the securities for the purpose of getting profit and financial investments, which become cash and real, moved to real physical capital.”.

Another occasion: it is advisable to discuss investments in two aspects: as a category of reserve and flow, which will reflect exactly the connection between “placement of funds” and “investments”.

Compared with such definition of the investments (capital placement) the definition of investments in the dictionary attaching the “Economics” seems to be unimproved: “investments – the expenses of gathering production and industrial means and increasing material reserve”. Not the investment expenses but (though the investments are followed by the appropriate expenses) exactly advancing.

” Real investments are the investments in the economical branches and also, they are kinds of economic activities, which provide influxing the increases of real capital that is increasing material values of the industrial means”. We can agree with such definition with one specification that material and nonmaterial values too belong to the real capital (wealth), consequently science-researching experimental-construction results, various information, education of the others and workers. Such service as organization of the excitable games, also the service of redistribution social wealth from one private person to another (except charity).

The concept of the industrial gathering appears, at the expenses of widening of basic, circulation funds and also insurance reserves takes place”.

We don’t meet with the termini “investments” in the earlier economical dictionary, but we meet the combined termini “investment policy” – the union of the industrial decisions, which guarantee main directions of the capital investments, the activities of their concentration in the determinant suburbs, on which the reaching of planned rates of development of the society production is depended, balancing and effectiveness, getting more and more production and profit of the national income for every lost Ruble”.

In the process of defining the investments, it is important to take in mind the sides of incomes, resources and expenses, because investment, from one side, is the result of the manufacture’s activity, and, from another one, – a part of income, which, in this case, is not used for usage.

We meet with such understanding of the concept of “investment” (here, they separate three types of the investment expenses: investments in the basic capital of investments, investments in the house building and investments in the reserves) in the modern economical publications and it is mostly used on the macro level during a statistical analyze of economical processes.

Recognizing the existence of the bounds between them, the authors ascribe short-termed investments to “one month or more” investments. A long-termed character of the fund placement is a significant feature of the investments (short-term doesn’t combine with the concept of investments).


Finance, Credit and Investments

Finance, Credit and Investments- Part 3

Banking crediting is the union of relations between bank (as a creditor) and its borrower.

These relations touch upon:

Herewith, there is a lot of common between the finances and credit as from the essential point of view, so according to the form of movement. At the same time, there is a significant distinction between finances and credit as in the essence, so in the form too. According to this, there must be a kind of generally economical category, which will consider finances and credit as a total unity, and in the bounds of this category itself, the separation of the specific essence of the finances and credit would take place.

When a manufacture or corporations use their cash funds and we mean the finances of industrial subject, such usage may be realized as inside the manufacture or corporation (there is no subject about returning or not returning of the usage), so gratis under conditions of returning. This latest is called commercial form because of transmitting the sources to others, but even in this occasion, it is the element of financial system of the manufacture and corporation.

From the essential position of expressing economic relations of finances and credit, we meet with cardinal distinctions between these two categories. Credit expresses distribution of the appropriate value only in the section of percentage given for loan, while according to the loan itself, a only a temporal distribution of money sources takes place.

In the discussing context we consider:.

The banks analogously needed concentration of the important own capital for influxing the consumers’ means and for getting higher percentage rate under the conditions of returning. Herewith, exactly on the financial basis, in the sort of financial fund (which later partially becomes loan fund) part of the bank capital appears to be the reservation (insurance) part of the fund, which by nature is financial and not loan. Notwithstanding the essential distinctions between finances and credit form the genetic-historical point of view, credit appears to be formed from finances and represent their modification.

The essential foundation of the credit essence and its important element is existence of trust between the two sides (in Latin “credo”, from which comes the word “credit”, means “trust”).

Its opportune returning;.

From the historical point of view, finances (especially in the sort of the state budget) and credit (beginning with usury, later commercial and banking) were developing differently for considering credit to be the part of finances. From the genetic-historical point of view, previous loaners, before giving loan, needed gathering the permanent capital not returning, that is the net financial foundation.

Getting percentage rate from the borrower for using the sources under his/her disposal.

Giving a certain amount of money to the borrower for definite purpose (though, we meet with the so-called free credits, aims and objects of crediting are not appointed in the assignment);.

From the point of cash means movement, main character of credit is the process of formation and usage of the funds of cash means under the conditions of returning and, as a rule, taking the value-percentage. If gating the credit value doesn’t take place (even in the exceptional occasions), according to the movement form, credit becomes a private occasion of finances, as from the net financial funds (consequently from the state budget) the loans which bear no interests may be used. If gating credit value takes place, by the appearance form, credit is discussed to be financial modification.

From the position of circulation of money forms (in the abstraction, historical process of formation economic relations and social budget and banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. And truly, from the position of movement of the money forms, finances represent the process of formation and usage of the funds of cash means. Very often such movements are fulfilled without returning, but sometimes, it is possible to give loans from the budget for the investment projects of other needs.

It takes place in any separate system of finances and credit, which have been touched upon during the analyses of defining finances and credit. Word combination “funding of the cash sources (fund formation)” reflects and defines exactly essence and form of economical category of more general character, those of finances and credit categories.

1) narrow and wide understanding of economical category of the finances;.

Discussing finances in narrow understanding under general traditional meaning;.

Discussing finances, as funding of the cash means, in wide understanding, which concerns finances – in narrow meaning and credit – in complete meaning.

Let’s sum up middle results of discussing new concept – “finance-investment sphere” and discuss its investment consisting parts.

It takes place in any separate system of finances and credit, which have been touched upon during the analyses of defining finances and credit.

In the Soviet economical science they for a long time used in the place “investments” the termini “capital placement”, which expressed the usage of the industrial factors in the sphere of real industrial activities during realization of capital projects. The termini “investments” and “investing” have the advantage towards the termini “capital placement” from philological and linguistic points of view, because they are expressed with one word. More concretely: “investment process”, “investment domain”, “finance-investment sphere” – all these termini are much more acceptable.

According to this, there must be a kind of generally economical category, which will consider finances and credit as a total unity, and in the bounds of this category itself, the separation of the specific essence of the finances and credit would take place.

From the position of circulation of money forms (in the abstraction, historical process of formation economic relations and social budget and banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. If gating the credit value doesn’t take place (even in the exceptional occasions), according to the movement form, credit becomes a private occasion of finances, as from the net financial funds (consequently from the state budget) the loans which bear no interests may be used. Notwithstanding the essential distinctions between finances and credit form the genetic-historical point of view, credit appears to be formed from finances and represent their modification.

Termini “funding” and its equivalent “fund formation” are used by us as the purposeful structuring of cash means, which is based on two poles – accumulation of money sources (gathering) and its usage for definite purpose in the way of financing and crediting.
We have established a new termini – “finance-investment sphere” (FIS). Analyses about interrelation of finances and credit made by us give us an opportunity of proving, that in the given termini, the word “financial” is used with the meaning of funding cash sources, its purposeful structuring. In this process we consider at the same time financial, credit and investments’ economical categories.


Finance, Credit and Investments- Part 2

Finance, Credit and Investments- Part 2

Welcome back to the Finance, Credit and Investments Series

This is the second article in the series and over the coming weeks, we will publish an in depth analysis of Finance, Credit and Investments.  We hope you find it informative.

We meet with absolutely innovational definitions of finances in Z. Body and R. Merton’s basis manuals. “Financial theory consists of numbers of the conceptions … which learns systematically the subjects of distribution of the cash resources relatively to the time factor; it also considers quantitative models, with the help of which the estimation, putting into practice and realization of the alternative variants of every financial decisions take place”.

For the goals of our monograph, it is important to compare well-known definitions about finances, credit and investment, to decide how and how much it is possible to integrate the finances, investments and credit into the one total part.
Some researcher thing that credit is the consisting part of finances, if it is discussed from the position of essence and category. The other, more numerous group proves, that an economical category of credit exists parallel to the economical category of finances, by which it underlines impossibility of the credit’s existence in the consistence of finances.

Credit is discussed in the following way in the earlier education-methodological manuals of political economy: “credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the state budget, unions, manufactures, organizations and population. Credit differs from finances by the returning character, while financing of manufactures and organizations by the state is fulfilled without this condition”.

These quantitative models and basic conceptions are used at every level of getting financial decisions, but in the latest definition of finances, we meet with the following doctrine of the financial foundation: main function of the finances is in the satisfaction of the people’s requests; the subjects of economic activities of any kind (firms, also state organs of every level) are directed towards fulfilling this basic function.

This is the traditional definition of credit. In the earlier dictionary of the economy we read: “credit is the system of economic relations, which is formed while the transmission of cash and material means into the temporal usage, as a rule under the conditions of paying and returning percent”.

In the manual of the political economy published under reduction of V. A. Medvedev the following definition is given: “credit, as an economical category, expresses the created relations between the society, labour collective and workers during formation and usage of the loan funds, under the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation”.

N. K. Kuchukova underlined the independence of the category of credit and notes that it is only its “characteristic feature the turned movement of the value, which is not related with transmission of the loan opportunities together with the owners’ rights”.
N. D. Barkovski replies that functioning of money created an economical basis for apportioning finances and credit as an independent category and gave rise to the credit and financial relations. He noticed the Gnoseological roots of science in money and credit, as the science about finances has business with the research of such economic relations, which lean upon cash flow and credit.

We meet with the following definition of credit in the finance-economical dictionary: “credit is the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit represents a form of movement of the loan capital and expresses economic relations between the creditor and borrower”.

We meet with the following definition if “the course of economy”: “credit is an economical category, which represents relations, while the separate industrial organizations or persons transmit money means to each-other for temporal usage under the conditions of returning. Creation of credit is conditioned by a historical process of fulfilling the economical and money relations, the form of which is the money relation”.

Following scientists give slightly different definitions of credit:

At the same time we must distinguish two resembling concepts: loan and credit.

” Credit – is a loan in the form of money or commodity, which is given to the borrower by a creditor under the conditions of paying the percentage and returning rate by the borrower”.

Combining every definition named above, we come to an idea, that credit is giving money capital of commodity as a debt, for certain terms and material provision under the price of firm percentage rate. It expresses definite economic relations between the participants of the process of capital formation. Necessity of the credit relations is conditioned, from one side, by gathering solid quantity of temporarily free money sources, and from the second side, existence of requests of them.

Credit is giving the temporally free money sources or commodity as a debt for the defined terms by the price of fixed percentage. Thus, a credit is the loan in the form of money or commodity. In the process of this loan’s movement, a definite relations are formed between a creditor (the loan is given by a juridical of physical person, who gives certain cash as a debt) and the debtor.

A Loan is characterized by:

o Here, the discussion may touch upon transmission of money and also things form one side (loaner) to another (borrower): a) under the owning of the borrower and, at the same time, b) under the conditions of returning same amount or same quantity and quality of the things;

o The loaning of money may bear no interest;

o Any person may take part in it.
With the difference with loan, credit, which is somehow a private occasion of the loan, represents:

o One side (loaner) gives to the second one (borrower) only money, and _ for temporal usage;

A credit is the bank credit. To our mind, it is not correct to use “credit” and “loan” as the synonyms.

We meet with the following definition of credit in the finance-economical dictionary: “credit is the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit is discussed in the following way in the earlier education-methodological manuals of political economy: “credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the state budget, unions, manufactures, organizations and population. Thus, a credit is the loan in the form of money or commodity. Combining every definition named above, we come to an idea, that credit is giving money capital of commodity as a debt, for certain terms and material provision under the price of firm percentage rate. Necessity of the credit relations is conditioned, from one side, by gathering solid quantity of temporarily free money sources, and from the second side, existence of requests of them.

o In it creditor is not any person, but a credit organization (at the first place, banks).

If the assignment doesn’t foresee something), o It may not bear no interest.


Finance, Credit and Investments - Part 1

Finance, Credit and Investments – Part 1

Welcome to the Finance, Credit and Investments Series

Over the coming weeks, we will publish an in depth analysis of Finance, Credit and Investments.  We hope you find it informative.

Scientific works in the theories of finances and credit, according to the specification of the research object, are characterized to be many-leveled and many-sided.

The definition of totality of the economic relations formed in the process of formation, distribution and usage of finances, as money sources is widely spread. In “the general theory of finances” there are two definitions of finances:

1) “… Finances reflect economic relations, formation of the funds of money sources, in the process of distribution and redistribution of national receipts according to the distribution and usage”. This definition is given relatively to the conditions of Capitalism, when cash-commodity relations gain universal character;

2) “Finances represent the formation of centralized ad decentralized money sources, economical relations relatively with the distribution and usage, which serve for fulfillment of the state functions and obligations and also provision of the conditions of the widened further production”. This definition is brought without showing the environment of its action. We share partly such explanation of finances and think expedient to make some specification.

Finances overcome the bounds of distribution and redistribution service of the national income, though it is a basic foundation of finances. Formation and usage of the depreciation fund which is the part of financial domain, belongs not to the distribution and redistribution of the national income (of newly formed value during a year), but to the distribution of already developed value.

This latest first appears to be a part of value of main industrial funds, later it is moved to the cost price of a ready product (that is to the value too) and after its realization, and it is set the depression fund. Its source is taken into account beforehand as a depression kind in the consistence of the ready products cost price.
Second, main goal of finances is much wider then “fulfillment of the state functions and obligations and provision of conditions for the widened further production”. Finances exist on the state level and also on the manufactures and branches’ level too, and in such conditions, when the most part of the manufactures are not state.
V. M. Rodionova has a different position about this subject: “real formation of the financial resources begins on the stage of distribution, when the value is realized and concrete economical forms of the realized value are separated from the consistence of the profit”. V. M. Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Both of them give quite substantiate discussion of finances, as a system of formation, distribution and usage of the funds of money sources, that comes out of the following definition of the finances:

“financial cash relations, which forms in the process of distribution and redistribution of the partial value of the national wealth and total social product, is related with the subjects of the economy and formation and usage of the state cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society other and social requests”.
In the manuals of the political economy we meet with the following definitions of finances:

” Finances of the socialistic state represent economical (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings the funds of money sources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, rising the material and cultural level of the people and for satisfying other general society requests”.
” The system of creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent exactly the finances of the socialistic society. And the totality of economic relations arisen between state, manufactures and organizations, branches, regions and separate citizen according to the movement of cash funds make financial relations”.

As we’ve seen, definitions of finances made by financiers and political economists do not differ greatly.

In every discussed position there are:

1) expression of essence and phenomenon in the definition of finances

2) the definition of finances, as the system of the creation and usage of funds of cash sources on the level of phenomenon

3) Distribution of finances as social product and the value of national income, definition of the distributions planned character, main goals of the economy and economic relations, for servicing of which it is used

If refuse the preposition “socialistic” in the definition of finances, we may say, that it still keeps actuality. We meet with such traditional definitions of finances, without an adjective “socialistic”, in the modern economical literature. We may give such an elucidation: “finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of formed economical product and national wealth for formation and further production of the cash incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests”.
“Finances – are cash sources, financial resources, their creation and movement, redistribution and distribution, usage, also economic relations, which are conditioned by calculations between the economical subjects, movement of cash sources, money circulation and usage”.

“Finances are the system of economic relations, which are connected with firm creation, distribution and usage of financial resources”.

2) “Finances represent the formation of centralized ad decentralized money sources, economical relations relatively with the distribution and usage, which serve for fulfillment of the state functions and obligations and also provision of the conditions of the widened further production”. V. M.

Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Both of them give quite substantiate discussion of finances, as a system of formation, distribution and usage of the funds of money sources, that comes out of the following definition of the finances: “financial cash relations, which forms in the process of distribution and redistribution of the partial value of the national wealth and total social product, is related with the subjects of the economy and formation and usage of the state cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society other and social requests”.
We meet with such traditional definitions of finances, without an adjective “socialistic”, in the modern economical literature. We may give such an elucidation: “finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of formed economical product and national wealth for formation and further production of the cash incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests”.