Large selection of loans for founders.
The portfolio of loans and forms of finance for entrepreneurs is still complex. There are state support programs, classic bank loans, a combination of both options or the possibility to secure debt capital from private sources.
The classic in business start-up financing is still a pure bank loan to finance the project. In addition to an offer from the house bank, it is also advisable to seek other offers in order to make a comparison of interest and repayment of the offers and to opt for the best offer. Direct banks often offer very cheap loans.
Since there is no need for a comprehensive and costly branch network, these banks can pass on the resulting cost savings through loan offers with favorable conditions to their customers.
The combination: Founder-friendly conditions from as well as comprehensive advice from a bank can also be a very good process for founders. Banks in particular take on an advisory role with start-ups.
As a rule, however, founders receive the most favorable terms from the Kreditanstalt für Wiederaufbau, or for short. Founder and micro loans can usually be claimed by . Microcredits can amount up to € 20.000,00 . The StartGeld Kredit für Gründer can be paid up to an amount of € 100,000.00. Gründerkredit Universal can even take on up to € 10,000,000.00.
Based on this, start-up founders also have the option of additionally securing collateral for surety bonds from the Guarantee Bank if the potential for collateral for lending is insufficient.
Crowdfunding and personal loans
Another topic that has become more and more established on the German business start-up market in recent years is private cash credit . There are now so-called credit marketplaces on the Internet. This financing variant has its origins in the USA. Crowdfunding has been active in the German credit market since about 2010.
Here, a detailed appealing presentation of the start-up project is of fundamental importance. Private investors will usually only invest in a startup if they are convinced of the business idea and recognize added value in the investment.
Supplier credits, leasing, contact with various venture capital firms or business angels focused on start-ups represent further forms of financing or financing options. However, these instruments are industry-specific . Not every area offers these forms.
As a result, the market for lending offers to start-ups is broadly diversified. Customers, who are in the life phase of the business start-up and are looking for an optimal financing option with favorable interest rates or also suitable repayment variants, should be given comprehensive advice and weigh exactly for which option they choose.
Anyone who wants to set up and start their own business, especially at the beginning of an increased liquidity needs, which must be met. Depending on the type and scope of the planned project, high amounts of capital may be required in some cases. Lenders are primarily banks such as home and development banks. But also microfinance institutions or online platforms and online banks lend to start-up companies.
The cash injection can take the form of a usual loan or loan. So-called promotional banks also release certain subsidies under certain conditions in order to support the founding of the company. These monetary funds are financed by the public budget.
Grants vs loans
In addition, a start-up entrepreneur can obtain subsidies or gain more financial leeway with the help of a guarantee. It is important for all forms of debt financing to have the order of magnitude in view and to calculate a corresponding repayment plan. The entrepreneur has the choice whether to choose a classic repayment or to arrange an annuity loan.
In contrast to the repayment loan, the monthly annuity loan is fixed from the beginning to a monthly fixed installment. For the entrepreneur this means better planning security and transparency of the monthly liabilities.
The regular load should be chosen and assessed in such a way that it can be managed with minimal profit expectations and is in a realistic relation to the sales volume.
Preparation for the start-up loan
In order to benefit from debt capital at all, structured and detailed preparatory work and planning must be carried out. Above all, banks weigh their risks particularly well and assess the probability of default and the probability of success of the company. A detailed and professionally prepared business plan is therefore highly recommended. In addition to the corporate purpose and the company objective, this should include the planning of the costs.
In addition, sales forecasts and profit expectations are particularly important. Of course, this should be based on realistic values that are based on facts and market-based, so that comparability is guaranteed. This makes a professional impression and allows a more precise analysis of the actual capital requirements.
In addition, the introduction of a certain amount of equity capital is essential to get a loan. In any case, the lenders also check the creditworthiness and creditworthiness of the company. Depending on whether it is a sole proprietorship or a corporation, it makes sense to consider in advance who will be employed as a borrower.
A manager with a negative report will not get credit for the company. In this respect, there should be no preloads. The presentation of all necessary documents gives the other person a positive impression. In addition to a safe and positive appearance, these are the basic building blocks for successful lending.
What to do in case of difficult borrowing
If it is already clear in advance that the granting of the loan will be impossible, other solutions should be considered. Depending on the size of the loan or even a negative credit rating of the borrower, the use of collateral can be used. Here it can already be considered in advance in which form this can be designed and which forms of security come into question.
A classic variant would be the guarantee. In this case, a third natural person or legal entity would issue a guarantee to the issuing bank. In case of default, the guarantor would stand up for the debtor and the lender could turn his claim to the guarantor. Of course, this should also have a certain credit rating and creditworthiness to be suitable as a guarantor.
In addition to the guarantee, however, other collateral can also be deposited in order to protect the lender against default in the event of a default. It would be imaginable here to be real assets such as real estate, machines or even securities and goods. These the borrowing entrepreneur assigns to the lender, so that this property is procured and he receives a right of exploitation. After the loan has been repaid, the borrower will regain ownership of the securities by transferring ownership.
Factoring to improve creditworthiness
An attractive and effective way to secure a better ranking among the issuing banks and potential lenders as a young entrepreneur is the use of factoring. In factoring, the company transfers its receivables from services or supplies, which may not yet be due, to a bank or a so-called special institute. This must also have a corresponding credit rating. In addition, so-called “reality” is assumed, ie the actual existence of a claim that can be used as a basis for the process.
The so-called factor assumes the full default risk. The customer balances his bill with the factor. Thus, the company retains its room for maneuver and passes the financial risk on to third parties. It will receive between 80 and 90% of the gross claim amount after 48 hours at the most, thus paying for liquidity. The missing 10 to 20% will be transferred after settlement of claims.
Especially for companies in the start-up phase, this is a particularly rewarding way to increase liquidity. It increases the equity ratio and increases financial flexibility. Likewise, the turnover is raised at best. The company can continue to invest and grow. The form of factoring shows to third parties that the entrepreneur has a professional liquidity management. The start-up can develop and remain competitive.
If these tips are not yet sufficient for obtaining the required liquidity, at least two options remain to obtain the desired debt capital. Anyone who does not get a loan officially approved but still needs a cash injection for his start-up, can of course also consult friends and acquaintances or ask the family for support.
It would also be possible to have a share in the company or in the profits, in order to create an incentive and convince the lenders after all. Another possibility is the concept of franchising. Depending on the project, you can look around the market and see if there may be a franchise concept in this area. In this way of starting a business, the franchisor sets up the structures and sets up a so-called corset, within which the foundation must operate.
In addition to the obligation to comply with external requirements, however, the start-up entrepreneur can also benefit from the knowledge and contacts of the franchisor. Especially when it comes to banking, the franchisor will support the negotiations.
Lending success rates are likely to be higher here, as the business is already performing successfully and the franchisor is representing and representing the company. This creates trust and suggests professionalism and competence. The bank also has comparative values and a successful business plan.