Financing without equity
Challenge & Feasibility Financing without equity – is this possible? This ensures optimal and balanced corporate financing. But if you have no equity at hand, you have to aim for a leveraged solution, because the company should actually be somewhere. With our contribution, we would like to give you an insight into the opportunities and risks of equity-free financing.
At the same time, we offer you a profitable alternative to conventional concepts for equity-free financing. First of all, we want to investigate why debt-financed capital raising can be a great opportunity, especially for a company founder.
On the basis of annual financial statements, the Company independently assesses which cash flows are expected from the Group. If this conclusion were good, the equity would have to be available. However, then no financing option would be required without equity. BuyNer therefore does not consider the Group’s cash flow to be particularly good. Because founders have no financial statements, they can not provide a written forecast of future income.
If the returns are not satisfactory, BuyNer does not rely on asset guarantees. In addition, it should be noted that banks only quantify the credit value of corporate values at 30% of the current market value in the consolidated balance sheet. Against this backdrop, small entrepreneurs and start-ups are encountering hurdles with equity-free financing via a house bank.
Loan application for lack of security
Mostly, the house bank rejects the loan application for lack of security. If no debt capital is available, there are other possible uses of debt financing. If financing takes place from the inside, by the company itself, this is usually possible through provision formation. Another option for equity-less financing is stock financing.
It is the optimal completion of factoring and particularly suitable for companies that have tied up cash through stock. The pre-financing of goods is also an equity-free investment in the wider sense. It is of interest if the assets to be financed are not available or do not want to be used.
Also, the pre-financing of goods is a welcome option for large orders without prepayment to compensate for an economic bottleneck. Another important justification for a company’s decision to pre-finance goods is delivery discounts and rebates. Another form of financing without equity is factoring. It is completely irrelevant whether the billing was created by private individuals or companies.
Borrowers have the option of having their business projects financed by a group of private investors. In doing so, the debtors set their financial goals and investors decide which projects they consider attractive. In Germany there are therefore many funding institutions that co-finance the start-up financing with a large number of projects.
These offerings include equity, debt, guarantees and allotments. Some start-ups only need a small line of credit, so micro-loans are of interest to them. The minimum loan amount for a Borrower is 0.1 BTC, of which the maximum depends on the sustainability of the private debt. The lending business is aimed primarily at online retailers, small entrepreneurs, self-employed and start-up entrepreneurs who can not provide sufficient collateral with banks or operate their business domestically or abroad and who can not live in Germany.
Since the borrowers do not need an account, there are no unnecessary transaction and conversion fees. Financing without equity – is that even possible? It turns out that a financing option exists without equity. Even if the founding and financing of a company without equity is not necessarily easy, it is still possible.