You do not want or can’t go through the bank box for the creation of your business or to finance an investment? Never mind: there are now 3 ways to borrow without going through a bank. Update on these alternative methods of corporate finance.
The historical financing solution: The “family loan”
To borrow without going through a bank, there is and has always existed a financing solution certainly risky but can sometimes save the bet: borrow from relatives. Most people are reluctant to this idea when it is most often the simplest and also the safest. You go around your relatives, tell them about your project (business creation or investment) and you see who would be willing to try the adventure at your side. If your project holds up, you know how to sell it and your loved ones believe in you (and can afford it, but that’s another problem), then it can lead to an incredible and rich story.
The whole thing is to define the terms of this loan (possible rates, amount and frequency of repayments, etc.) and to sign a loan agreement (ideally with a notary). Our advice: do not borrow everything from the same person unless the amount is really small. Ideally, spread the loan among at least 2 people to dilute the individual effort of each of the lenders.
In recent years, thanks to the development of a social and participative web, crowdfunding platforms have been developed for businesses. These platforms are intended to link individual investors and project holders in search of funding. In other words, thanks to these crowdfunding sites for businesses, all Internet users can become business angels, at their own level.
So today there are many alternatives to the bank loan to finance an entrepreneurial project. Banks are cautious and braked four feet to help companies? Too bad for them: the economy can be done without them and benefit everyone. Because the advantage of non-bank financing is that they benefit both borrowers (companies or entrepreneurs) who borrow more easily and at attractive rates, than lenders who enjoy returns generally much higher than those offered by conventional savings products offered by banks.
The purpose of short-term credit is to finance the company’s operating cycle. Your solvency guarantees must be reliable and certain. This type of loan is only for companies already created. In terms of personal contribution, proportions must be respected. It is advisable to balance capital and loan funds as much as possible. However, there are no general rules. Some lenders would agree that the minimum ratio is 25 to 30% of personal contribution. You can find the short term ones by typing loan related keywords and let Google show all the online short-term loan sites to you.
By reading this article we hope you can get some understandings or reasons why you do not have to rely solely on the bank for your funding. You can make your instant decision!