What is funding?

In the broadest sense, financing is fundraising.

In finance, the term financing means the supply of an economic entity with the supply of capital in order to achieve its goals.

The economic subjects are private households, companies and the state.


In a private household, employment income, capital income if you have capital, and transfer income are available to finance the goals. This also includes the savings and proceeds from the sale of objects. If your own funds are not sufficient, for example, to buy a house, you have to think about debt financing, that is, about taking out a loan. Here at this point you should think about a financing plan in your household. Because to buy a house or another major purchase, this is necessary. The financing plan serves to maintain your liquidity. You need to balance all incoming and outgoing payments. This is the only way to tackle your goal of buying a house. It all sounds very nice at first, but overall it is quite a complicated process.

Financing a company

In addition to the example of buying a house already explained, you may be considering setting up your own company. You would love to be your own boss and take control of your own destiny. Starting a company is a long-awaited dream for many. If you do not have it, you will need financial means to found it. Financing to raise capital is the first step for your company. When raising capital for your company, you enter into a financial relationship with the lenders. This relationship is very important. If the capital base is too low, wrong or insufficient funding is a frequent reason for bankruptcy. This is also the reason that your conception and the implementation of your financial planning are of great importance.

Various types of financing are available for financing:

Equity or equity financing
Debt or credit financing
Self or sales financing