Has the bank rejected your financing application? Are you looking for an alternative solution to finance the development of your business? Solutions exist. You need to understand the bank’s refusal and reorient yourself.
Ask Your Banker
Is it the type of need that posed the problem, the lack of personal contribution, the absence of surety or guarantees to apprehend, or the financing file that was not complete enough? To advance in your search for financing and to target it better, you must, above all, understand this bank’s refusal.
Contact a CCI
To gather as much information as possible about existing funding, go to advisers linked to your sector, for example, a Chamber of Commerce and Industry (CCI). These public bodies help entrepreneurs identify their needs and direct them to suitable financing bodies, state aid, etc. You can ask them for more detailed and personalized support for a fee.
Hire a Broker
Don’t have the time or don’t want to do this research yourself? You can always turn to a broker who will investigate for you to determine the financing best suited to your activity, business, and need. You will be able to benefit from his expertise and especially from his network. His remuneration generally depends on the amount of credit granted for the success of his mission. Your interests go in the same direction.
Corporate Finance: What Other Solutions?
Banking competition
If your historic bank does not follow you, do not hesitate to approach others. They do not all have the same criteria. A banking player will also be ready to make concessions to attract a new client and thus recover the company’s financial flows.
The banking pools
Building a bank pool allows credit to be divided between several banks – and, therefore, the risks associated with the project. However, they will also have to share the company’s financial flows. This last element remains very disappointing for a bank. Indeed, a banking organization will prefer to keep all the flows. It will, therefore, probably choose to carry out co-financing with, for example, a crowdfunding platform. The latter does not require opening an account, and flows can be kept at 100% by the banking institution.
Crowdfunding
In recent years, crowdfunding has become a natural alternative to business bank loans. Different types of platforms exist, adapted to the diverse needs and stages of maturity of a company.
Crowdfunding or donation against donation
With collections of $5,000 on average required, crowdfunding is more suited to small needs when starting a business. This method of financing makes it possible, for example, to supplement a personal contribution (springboard to the bank loan), acquire its first stocks, or launch the manufacture of its first products.
Crowdlending or crowdfunding
Particularly suited to the development of VSEs / SMEs, crowdfunding loans can borrow between $10,000 and $2.5 million from individuals in exchange for financial interest. Generally, platforms rely more on companies’ actual reimbursement capacities than on the guarantees and guarantees they can present. Therefore, this financing solution suits intangible needs such as recruitment, work, marketing expenses, R&D costs, IT equipment, or stocks.
Crowd equity or participatory investment
Rather suited to companies in the creation or startups in the acceleration phase, crowd equity allows individuals to become micro-shareholders in exchange for financial investment. As with the loan, companies can raise funds up to 2.5 million dollars.
Business angels
Business angels choose projects that are important to them. More than a financial investment, they will offer these time-creating companies and their expertise. Indeed, they are generally former entrepreneurs or businessmen/women.
Daily factoring or financing
These solutions, which work almost the same way, are particularly suited to cash flow needs. In both cases, the debts owed by the company’s customers are advanced to it. With factoring, the factors (or factoring companies) become the owners of the company’s debt. They, therefore, reimburse the company and are responsible for monitoring the receivables. With daily financing, the company remains the debt owner, but its bank makes a cash advance.
Honor loans
Honor loans are for business startups and takeovers. Honor loans are zero-rate loans. The purpose of this credit is to be a lever for obtaining a bank loan. It generally complements a personal contribution.
Investment funds
Financial companies aim to manage and invest the funds entrusted to them by their investors (individuals, institutions, etc.). It seeks to invest in companies with promising growth opportunities and generate an attractive return on investment. Several investment funds choose to invest in companies according to maturity sector. For example, venture capital funds oriented towards creation or development capital funds concentrate on growth companies.
Leasing
When considering purchasing vehicles or machinery, leasing allows companies to spread their payments over time and not take out credit or weaken their cash flow.
Target funding adapted to their needs
For a business executive, it is imperative to learn to target the resources relevant to his project. The bank is not the solution to all funding requests. There is a solution for every need! Understanding the tools available and diversifying its funding sources have become real challenges for a business executive! Having alternatives in mind and knowing what solutions you can claim will also bring you greater bargaining power with the bank.
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