Business angels and love money
Family and friends (from whom the love money comes) and business angels may be willing to lend you money without requiring collateral, in exchange for a stake in your business.
Business angels are often wealthy individuals who invest in high-potential start-ups, alone or through investor networks, to provide seed funding. They often want to obtain an ownership stake in the business that they can resell at a profit as the business grows. They may also want the opportunity to have a place on the company’s board and share contacts and skills.
Crowdfunding to avoid financing from a bank
It is possible to support your project with the help of an online community. This can be free of charge (donation), or pending a later return (loan). It’s a fantastic way to put your project idea to the test. If crowdfunding is successful, this will be a strong argument to present to banks.
However, this method has some dangers. You risk investing financially and in terms of time in terms of communication related to the smooth running of your campaign. However, it is possible that it does not work as you hoped, that you do not reach the desired target or that your idea is not well received and that someone else appropriates it. Crowdfunding is therefore not a magic cure, and it is necessary to prepare carefully in order to maximize your possibilities.
Intercompany loans: borrowing between two companies
Inter-company loans, introduced in 2015 by the Macron law, are sums of money that are loaned from one company to another. The aim of the maneuver is for a first company with a large cash reserve to pass on its surplus to a second company with a short-term cash flow problem. It is a question here of a kind of professional mutual assistance.
This professional loan without going through a bank is granted at a zero rate and its repayment period can extend for 2 years at most. It can only be done between several companies of the same group, or between two companies maintaining a prima facie proven commercial relationship.
Obtain funds from organizations granting aid to businesses
In order to resolve the liquidity needs of companies, the State and public organizations offer various financial assistance. These aids can be alternatives to bank financing or be a complement that will strengthen your file.
In France, there are numerous schemes of this type, but the most recognized are the following: NACRE, or the New Support for Business Creation or Takeover, and the CAPE, or the Business Project Support Contract .
To avoid borrowing from a bank, a business manager can also contact his local area to check his eligibility for aid payments which may be local, departmental or regional (tax credit, subsidies, etc.). ). It is also possible to contact organizations, such as Bpifrance, which offer support for the creation and development of business projects.
To obtain professional credit, you must demonstrate that the purpose of your application and your objectives are both logical and coherent in the eyes of your creditor. When a project is thought through and the borrower organization or individual presents admissible documents or a good file highlighting its financial credibility and the need for borrowing, it has a better chance of obtaining financing. But if your company does not have the funds to make a contribution to the operation, the bank’s response will very often be negative. This financial contribution is equivalent to a percentage of the amount to be borrowed, gnerally between 10 and 30% of it. All these criteria can bar your access to a bank loan.
Other guarantees are also sometimes required by lenders. These generally take the form of tangible or intangible assets that the bank can seize and resell to recoup its losses if you do not repay your business loan. Subscribing to guarantees may result in additional costs. But it exposes your company more in the event of non-repayment of the loan. It is for this reason that managers sometimes consider financing their business projects elsewhere than with banking establishments.