Business projects (creation or takeover) generally mobilize quite significant funds. In most cases, the contributions of the founders are not sufficient to meet the financial needs . They must then turn to other players to find funds : banks, investors, individuals grouped together within crowdfunding platforms, etc. The list is long, and each method has advantages and disadvantages.
Here are our tips for setting up the financing for your business creation project , or business takeover .
Find out about the different financing methods
There are many ways to finance a project to create or take over a business. Traditionally, we think of the bank loan but it is not the only financial resource that can be mobilized. Some financing can be integrated into the capital of your company (investor equity investments, donations from crowdfunding) while others are repayable in one way or another (loan, leasing, financial leasing, etc.) , or not (subsidy, prizes and winners).
Here is an overview of the different means of professional financing :
| Equity | Non-refundable In principle, recoverable upon sale of securities/company |
– Contributions from the creator (personal savings, intra-family donations, ARCE, honor loan, etc.) – Donations from individuals grouped together on crowdfunding platforms – Entry of investors (club, venture capital companies, equity crowdfunding, business angels, etc.) |
| Loans | Reimbursable Interest-bearing money loan |
– Loan of money from a credit institution (professional banks, microcredit organizations ) – Borrowing from individuals grouped within crowdlending platforms |
| Leasing or renting | Provision of property against payment of rents/royalties | – Purchase by a specialized leasing company of movable/real estate (equipment, vehicle, tools, etc.) on behalf of the company and made available against payment of a sum of money |
| Aid and subsidies | Non-refundable Granted under conditions |
– Subsidies allocated by the State and local authorities (region, department, municipality, etc.) – Prizes paid to the company within the framework of public or private creation competitions |
Make sure you have estimated your financial needs as well as possible
Entrepreneurs have a tendency to underestimate their financial needs , in order to limit the importance of indebtedness. This is unfortunately a mistake . You must forecast your need for financing. This must not only include the purchases of materials necessary for your activity ( investments ), but also the purchase of starting stocks as well as the marketing and advertising expenses necessary to launch your offer.
You also need to accurately quantify the amount of your working capital requirement (WCR) . This is the result of various time lags. These are the gaps between the moment you have a good/service and the moment you pay for it, between the moment you sell a good/service and the moment you collect the money and finally between the moment when a good enters your stocks and the one where it leaves.
Bring enough money to your business
Legally, most companies can start without any input from the founders. It is, for example, possible to create a SARL or SAS with only one symbolic euro . However, in practice, no bank will agree to lend you money if you do not provide a minimum of funds . Personal contributions are therefore essential: they will allow you to access the financing system.
That said, having a contribution is not enough to obtain a loan, it is still necessary that the latter is sufficient . Banks generally require a personal contribution of at least 25% as part of a business creation project and 15% as part of a takeover project . In the latter case, the profitability of the acquired company can have a considerable impact on the percentage of personal contributions.
Write a business plan and have it verified by a pro
Whatever method of financing you plan to use, it will be in your best interest to write a document that will help you, not only to put your ideas in black on white, but also – and above all – to structure your thinking, to clarify your project and summarizing the various financial assumptions made. This is the business plan . In practice, this document is essential.
But, in most cases, producing a business plan is not enough. Banks and investors generally require a professional to analyze and validate the document. A chartered accountant is particularly empowered to do this. The latter can accompany you to build your business plan and validate it, or simply to check it. He will put his “visa” on your business plan; which will make you gain credibility .
Contact several establishments or go through a broker
If you are looking for bank loan(s), first contact the bank where you are a personal customer . If you appreciate the banking relationship that you have with your banker and that your project has all the required qualities, you will put all the chances on your side to obtain the best banking conditions . Do not hesitate to contact other credit institutions to obtain different proposals and compare them .
You can also, if you wish, contact a professional financing broker and mandate him to find you the best conditions at the best price. Be careful, however, it is better not to initiate procedures on both sides simultaneously. The financing broker risks, in fact, depositing your file in one of the banks that you have already contacted, which can block the procedure.
