Financing young businesses: difficulties and possible solutions! – News 24

Financing is a crucial issue for start-up development. The traditional means generally used by young entrepreneurs are bank loans and fundraising. But often they are faced with huge ones financing difficulties, a major problem for the survival and development of their businesses. In this article, we analyze in detail these difficulties encountered by young companies in finding financing, as well as possible alternatives.

The financing difficulties of young businesses

The reality of finance in the business world is that it is easier for a company with a proven track record in the market to obtain finance than it is for a start-up. Indeed, the banks that are the main players in the business financing it must guarantee the soundness of the economic model and the certainty of reimbursement. Like any business, banks want to minimize risk-taking and maximize profitability. It is therefore necessary to have sufficient balance sheets to allow the bank’s experts an in-depth analysis of the firm’s stability, as well as its own development potential. This is obviously a luxury that young companies, which generally do not have budgets yet, cannot afford.

Furthermore, banks are systematically reluctant to finance new businesses when the project is considered too bold or when the product or service does not seem to meet the needs of the market. Furthermore, when the financing plan is unbalanced or you do not have enough equity, or when you do not have the experience desired by the bank, you are likely to be faced with a bank refusal.

As for fundraising, that’s not a foregone conclusion. According to the data, only one in fifteen start-up fundraisers are successful. Again, we are generally not close to the initially expected amount. Additionally, it should be noted that there are obstacles preventing some more traditional companies from undertaking fundraising. It is therefore not that simple find investors and get them to invest in your business. Hence the need to think about the alternatives available to young companies.

Alternatives to corporate financing difficulties

If you face a refusal of a bank loan or if you did not know how to find investors to raise funds to increase your share capital, it is not a coincidence. There are various alternatives to start and develop your business.

Fund-raising

the fund-raising also known as crowdfunding allows you to bypass traditional financing methods, to obtain funds in order to grow your business. Thanks to the Internet, you can now raise funds from an audience as large as it is diverse, to finance a creative or entrepreneurial project. Crowdfunding can take the form of a loan with or without interest, an underwriting of financial securities, or even a donation or contribution that may give rise to consideration.

However, even with crowdfunding, financing your business remains a long and tedious process and in the end the result is often disappointing. In fact, for a successful loan, it is essential: knowing how to dialogue with investors, organizing a real marketing campaign by mobilizing all its communication channels, knowing how to identify and concretize the signs of interest, knowing how to reassure the investment that is still a novelty. for most savers, …

Furthermore, an interesting alternative seems to emerge via the Ayomi financing method which offers an automated fundraising solution and which responds to the above problems for the financing of young people and small businesses:

  • No budget needed : Ayomi identifies investors interested in the sector and already present in the company’s digital network.
  • There is no need for repayment capabilities : it is an equity investment.
  • It doesn’t take time : the technology developed by the company makes it possible to automate a large part of the activities.

Other possible alternatives

Outside of fund-raisingyou can resort to other methods that also allow you to circumvent the traditional methods of financing.

  • Local capital : This is mainly about raising funds from your entourage. In this context, you can receive up to € 31,865 without paying duties.
  • Loans of honor : benefits from a loan of up to 90,000 euros without guarantee or personal guarantee. These are generally zero-interest loans registered as equity, offered by some support networks.
  • Incubators : support structures for business creation, incubators are renowned for their missions of assistance and advice to entrepreneurs. The support process can also lead to contacting investors for financing your business.
  • Microcredit : often offered by associations, microloans represent a good alternative for young businesses that encounter difficulties in accessing bank loans.
  • Business angels : these are angel investors who wish to invest part of their fortune in young innovative companies. When your project arouses the interest of one or a group of business angels, you can benefit from funding ranging from € 50,000 to € 700,000, for the launch or development of your business.

You can also explore the path of investment funds, intercompany loans, or contests, all of which are means by which you can obtain financing for your start up

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