SME financing
SME financing is both desired and hated. Banks are rigid and alternatives are not always available flexibly. Yet for many entrepreneurs it is the most important way to get money.
It is clear as day that SMEs need funds to function.
That is, it is the main way they know. Financing for SMEs helps them to purchase their supplies, purchase machines and pay the running costs. Without business financing for SMEs, the till would soon be empty, so is there an alternative?
It is clear that SMEs need money to function. Where that money should come from, that's what the discussion should be about. SME financing is still common, but certainly not always the best solution.The disadvantage of a financer for SMEs
Financing for both SMEs and large companies acts as an important limiting factor. The lender believes in the current business model and day-to-day business. It offers sufficient stability and certainty that it will be possible to make the interest and repayments.
A financier is generally much less interested in plans to grow and ideas to make the business better. It revolves around the money lent, which must be returned including interest. And in addition, banks and other lenders do not like risk, because this could only hinder the stability of the repayments.
Funding instead of financing
Funding is therefore much more interesting than SME financing. It is done by investors instead of creditors.
The alternative to SME financing is called sharefunding
Door investeerders die geloven in zowel het bedrijf zoals dat nu opereert, als de toekomst die er voor hen ligt. Voor hen, omdat investeerders de samenwerking aangaan met ondernemers. Vanuit funding geven ze hun vertrouwen in zowel het bedrijf, de ideeën voor de toekomst als de groei die er te realiseren valt. Er is geen sprake van maandelijkse betalingen om de schuld af te lossen. In plaats daarvan is er ruimte voor waarde groei, dividend en kan het bedrijf besluiten de winst opnieuw te investeren en harder te groeien. Zodat zowel de organisatie als de investeerders daar uiteindelijk samen van profiteren.
Debt versus equity. Borrow money or issue shares?
Alternative for SME financing: Sharefunding
The alternative to SME financing is called sharefunding. It concerns investments by investors, who are involved in the company. Because they believe in the mission, the vision of the organization and the growth that is possible. And for many investors it is about much more than just the money. It is the shared mission that leads to strong collaboration, which also prevents entrepreneurs from needing traditional financing for SMEs.
The debt versus equity calculator
Eyevestor has made a calculator to show the difference of impact if you borrow money and have to pay off or if you issue shares and can reinvest the redemption and interest. Get started so that you can calculate what your best choice is. Eyevestor - debt versus equity calculator.