Do you need to begin your own business or expand and are having trouble getting a business loan from your bank? There are other ways to get funding! Business angels, crowdfunding etc. Overview of alternative solutions.
Fundraising from those around you
It is often the first idea when you are looking for financing: to appeal to your relatives. These funds collected from family members, friends and other relationships are called love. They allow you to benefit from tax exemptions or reductions .
In the family context, the beneficiary of a donation can in fact receive up to $ 31,865 without having to pay fees. Provided that:
- The donor is under 80 years old
- Whether the beneficiary is his or her child, grandchild or great-grandchild (or nephew or niece if the donor has no descendants)
- Whether the beneficiary is adult or emancipated.
This donation must be the subject of a notarial deed, a private deed or a declaration of donation. The beneficiary must notify his public finance center within one month.
Honor loans
If your search for financing concerns a business creation or takeover, or if you are a young leader, you can turn to an honor loan . It is a loan without guarantee or personal guarantee , generally at zero rate, and registered in equity. Its amount can reach 90,000 $ for innovative projects.
Obtained after selection and passing before a jury of professionals, honorary loans can also bring credibility to your project and facilitate obtaining bank financing . “The loan of honor has a significant leverage effect, ensures Initiative. For 1 dollar of honor loan, banks grant an average of 7.5 dollars of additional financing. “
Microcredit
Designed specifically for people having difficulty accessing bank financing, microcredit aims to create, take over or consolidate a business. The goal: to allow project leaders to create or perpetuate their own jobs. In addition to the loan, this system is accompanied by monitoring of beneficiaries: assistance in administrative procedures, help in controlling costs, commercial development, etc.
Microcredits are generally offered by associative actors. For example, Adie offers a financing plan of up to $ 20,000 , through microcredit (up to $ 10,000 ), supplemented by an honor loan or public aid for example. The granting of a microcredit is based on several criteria:
- The project leader: motivation, experience, skills etc.
- The project: location, potential, estimated turnover, etc.
- Repayment capacity.
Crowdfunding
The crowdfunding or crowdfunding is a funding mechanism to raise funds from a wide audience in order to finance a creative or entrepreneurial project, which works most often via the Internet. This funding can take 3 forms:
- A loan
- The subscription of equity or debt securities issued by the supported company
- A donation or contribution which may give rise to a counterpart.
If you turn to a crowdfunding platform by loan (with or without interest) or by subscription of financial securities, it must necessarily justify a regulated status:
- Crowdfunding investment advisor (CIP) or investment services provider (PSI) approved by the Prudential Control and Resolution Authority (ACPR) for the subscription of securities
- Crowdfunding intermediary (IFP) for loans.
Incubators
Incubators are support structures for business creation. By getting closer to an incubator, you can get support in the realization of your entrepreneurial project for a period of 1 to 3 years. If incubators are known for their missions to help and advise entrepreneurs, they can also put you in touch with investors who want to participate in the capital of your business.
The nature of incubators is diverse. They can be public or private structures, attached to local communities, as well as to large-scale companies.
The mon-incubateur.com site offers a directory bringing together the majority of incubators to which you can apply in order to support your project.
Business angels
If your business has strong growth potential, it may be of interest to business. Behind this term are natural persons, often former senior executives or entrepreneurs themselves, who wish to invest part of their financial assets in innovative companies. Thanks to their experience, business angels also provide advice and address book.
“Business angels, alone or with others, are likely to finance investments of 50 to 700,000 $ “, explains the national federation Angels. “In general, they remain in the minority in the capital of the company (share less than 20%) but actively participate in the life of the company and in decision-making”, specifies the Agence Entrepreneur (AFE). “They all have the same objective: to generate substantial added value through their investments”. They can also benefit, like any individual who invests directly in a company, from tax reductions.
Business angels select their project carefully, focusing on the potential success of the project. Fundraising can therefore be spread over a year. “Ideally and if the conditions are met, the business angel resells its stake within 3 to 5 years”, indicates AFE.
Investment funds
Nearly 300 investment funds are grouped in within the Association of Investors for Growth (Afic) . These are professional shareholders who take a majority or minority shareholding in companies generally not listed on the stock exchange. “[They] participate in the definition of a clear and long-term strategy for the company, allowing it to make value for its clients, shareholders and employees”, underlines the association.
This investment capital activity can take place in 5 areas:
- Business creation and the financing of new technologies (innovation capital)
- Growing companies with high development potential (development capital)
- The acquisition, transfer or sale of companies (transfer capital)
- The buyout of ailing companies (rollover capital)
- The financing of infrastructures, such as telecommunications or public road equipment (infrastructure funds).
Private equity players inject an average of
$ 5 million per company, and rarely less than $ 250,000 , during a partnership that generally lasts 3 to 7 years. In 2018, they thus invested nearly 15 billion dollars to finance more companies, including 75% of SMEs, according to figures from Afic.
Inter-company loans
Who better than another company to understand your cash flow needs? Since the law for growth, activity and equal economic opportunities companies have the possibility of being creditors or debtors of each other. The limited liability companies (LLCs) and corporations can now lend to micro-enterprises , SMEs and intermediate sized companies (ETI). Under certain conditions:
- Lending companies should only make this loan as an accessory to their main activity
- Loans must not exceed a term of 2 years
- The loans granted must take the form of a loan agreement
- Companies must be able to attest to an economic link (direct or indirect subcontractor, same economic interest group, same group awarded a public contract, etc.) Justifying the credit.
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