Alternative financing sources for SMEs

 

Today we are going to show you different sources of financing for your project. Trying to finance you with this type of financing alternatives is, in many cases, faster, easier and with fewer headaches.

So if the idea of ​​creating your own business has been haunting you for a long time, but at the moment of truth the fact of having to jump into the pool scares you, especially due to the following question, where can I obtain sources of financing for my business?

Options to cover the financing of a business

Currently there are different ways where any entrepreneur can go to get the financing he needs. We can include the different forms and sources of financing between the most traditional methods and the most innovative financing methods. We will see them in detail below.

Credit and surety institute

It is a public bank that grants loans to companies. In Spain, there are ICO Lines, there is a triple relationship between the companies or entrepreneurs that receive financing, the ICO that establishes the conditions and characteristics of the lines, and the banks as Credit Institutions that market the ICO lines. These lines are for Spain, but in other countries there are also state lines granted through banks.

Bank financing

It is the most widely used financing method. After the economic crisis there was a tightening of the conditions to obtain financing through this method.

The first thing that banks study is the business idea and the ability to monetize that idea and generate profits, but it is a sine qua non condition for granting the loan that the entrepreneur also presents a guarantee to guarantee the viability of the operation. It is very common for banks to oblige the contracting of additional products outside of the financing objective and apply, in case the business generates profits above those expected and they want to eliminate the contracted debt, a commission for early repayment.

Classic alternative financing sources

Companies that obtain financing through this type of financing source called venture capital have high growth potential.

Investors who participate enter the shareholding. You will be able to access seed capital or venture capital for companies in the initial phase or growth capital or private equity for already consolidated companies. This option is more appropriate for companies that have demonstrated some type of traction, that is, that the company already works.

Business Angels

Business angels are investors who have funds and want to help small businesses. Before they were practically the only alternative, since they do not look at your guarantees (which in the case of entrepreneurs are usually few), but they look at the viability of the business in the future and especially the entrepreneur.

This situation is NOT what happens normally, and so it goes! I'm sorry, but I can't help but think that in many Latin American countries and especially Spain, they continue to have misconceptions. Entrepreneurs are not supported enough yet and investors are back with the real estate roll. We'll see:

Has a house ever produced something? No right? Well, don't play it, that's speculation.

Do you have any kind of entrepreneurial morality? So HELP those who want to create value and do not speculate to take advantage of selling a flat as expensive as possible to those who can barely afford it.

The business Angel is usually a profile that likes to invest, but also helps and has fun doing it, so it is sometimes a highly recommended option to start with.

Friends Fools and Family

The 3 F. Friends, family and crazy people. And it is so, at first let's face it, there are few options that you will succeed, but even less if you do not try. Who will trust you? When you go to a bank and they tell you that you have to provide guarantees, does that trust you? In the end, you only have your family members to help you, as always as one of your possible sources of financing.