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Are you looking for financing to start your business activity? Or do you want to find funds to develop other activities for your structure in the expansion phase or at the stage of maturity?
So, be aware that several options are possible to finance your entrepreneurial project. From personal contributions to outside investors, through loans and crowd funding, you are spoiled for choice. This article also takes stock of these different financing solutions for businesses. But still, discover as a bonus how to build a concrete financing file. In any case, for your financing request, consider involving a broker specializing in professional financing. You definitely have everything to gain.
Financing your business: possible solutions
Whether to start or to expand its activity, a company needs funds. Indeed, when it comes to creating, taking over and developing a business, money remains the sinews of war. Fortunately, financing solutions for businesses are legion. Immediate details.
Personal contribution
It's obvious! The personal contribution of the entrepreneur constitutes the first source of financing for the creation or takeover of a business. Starting point of your entrepreneurial project, a personal contribution is also mandatory. In fact, as a project leader, you must provide a minimum of funds to start your activity. In principle, this contribution in capital or in a partner's current account must represent between 20% and 30% of your financial needs... It effectively makes it possible to meet the first expenses of the structure (administrative costs, notary fees, etc.). In addition, this starting fund reflects your motivation, your commitment and your will. It also attests to the efforts you are willing to make to launch your business. Enough to convince and encourage potential investors and credit institutions to give you a boost for the development of your project!
In short, the personal contribution is the first financing solution for companies. But it is also an important lever for obtaining other funding.
Outside investors
Obviously, the personal contribution is insufficient to allow the company to function as it should. This is why it should be supplemented with other financing solutions. Calling on outside investors is therefore essential. Love money, venture capital, business angels, the options are not lacking.
Love money
As its name clearly suggests, love money is for the entrepreneur to raise funds from those around him. Simple and effective, this financing alternative allows you to ask your family, friends, neighbors, colleagues and acquaintances to invest in your project.
Love money can also take different forms: donation, loan of money and capital investment. Either way, to avoid future disagreements, it is important to put commitments in writing. Therefore, if the donations are rarely the subject of a contract, it is a necessity for the loan and the acquisition of equity. On the one hand, in the event of a loan of money, it is imperative to proceed with the signing of a loan contract. On the other hand, in the event of a capital investment, the signing of a shareholders' agreement is required. Failing this, it suffices to formalize this operation in the articles of association of the company.
Capital risk
To increase your company's equity, you can also use venture capital. This is a capital investment for the benefit of an innovative company with a promising future. This financing solution is therefore aimed at structures in the start-up phase. However, it also allows unlisted companies to benefit from funds at a stage of development where obtaining a bank loan is often difficult. Similarly, it concerns young companies with high growth potential.
As mentioned before, venture capital corresponds to an equity investment made by professionals or investors. To do this, the latter can subscribe either to ordinary shares, or to shares with priority dividends or shares accompanied by share subscription warrants (ABSA). Otherwise, nothing prevents them from granting advances on a partner's current account. In any case, in addition to funds that can reach several million euros, they also make their network and expertise available to the structure.
Public aid and subsidies
Indeed, public authorities (local, regional and national) as well as associations can grant subsidies to companies. And this, in order to help them at all stages of their development: creation, expansion, in case of difficulty… Moreover, these public and private organizations do not limit themselves to granting financial aid. They also provide entrepreneurs with specific support adapted to their project and their situation.
Factoring
Factoring or factoring is the ideal solution for financing a company's immediate or long-term cash flow needs. In concrete terms, it consists of a transfer of the company's trade receivables to a factor. More flexible than the discount or the Dailly law, it is aimed at all structures, regardless of their size and sector of activity.
To set up this financing mechanism, you must sign a factoring contract with the factor. There are thus several types of contracts depending on the needs of the company. Factoring contract notified, balance, without recourse, confidential…, it is according to the requirements of the structure.
