I need money , that is the question that every entrepreneur or financial director of a company is constantly doing and it costs a lot to solve. In this article we will explain how to get money quickly and not so quickly, that is, get money to pay off in the long term and finance immobilized, for example, or get money to finance short-term things like a small deficit treasury or part of the working capital of the company.
What financing products are currently on the market?
To finance long-term projects, the best is with Own Resources , but if you do not have them, you can always resort to a Mortgage Loan or a Long Term Loan for more than 5 years. A loan consists of a financial institution giving the company a certain amount of money with the condition that it is returned within a certain period and with a certain interest rate.
Then there is the Leasing or Financial Leasing, which consists of a contract that is signed by both parties through which the SME leases the use of a good to a Renting company for a certain period of time and finished it, it can be with said good paying the residual value of the leased asset. However, in the Renting or Operational Leasing, the use of an asset is leased equally, but this time there is no purchase option at the end of the lease term and includes maintenance, insurance, repairs and maintenance expenses in the monthly installment. the rest.
Already for the Short Term, there are a multitude of financing products, such as lines of credit , which are freely available amounts up to a certain limit that the financial institution establishes depending on the risks of each SME, usually they are Revolving , that is to say , you can return to have the amortized credit after paying the monthly fee and can be articulated in the form of credit or credit card , the drawback is that they are more expensive than loans, but they are also easier to get and they suppose financing at the moment, like the one discovered in current account , that comes very well when you have been without liquidity, but that then they charge you with blood with high interests and commissions.
If we have commercial paper, we can also open a discount line , which is only the possibility that carrying our credit titles (checks, promissory notes or bills of exchange) to the bank advances the amount without waiting for the expiration in exchange for paying some interest and discount commissions that will be based on the amount of the title and the time period until the expiration.
More financing products
Two other well-known financing products are Factoring and Confirming . The first is that a company manages the collections of your customers, in exchange for some commissions and interests, advancing the amount of them and the second consists of the same but with the management of suppliers, ie a financial company take the payments and offer your suppliers to collect them in advance in exchange for some expenses, therefore here the one that obtains the financing is the supplier. Every company is someone’s provider and the client should be consulted if they have Confirming, because this is a very good way to collect your bills beforehand and get funded.
There is also the possibility of obtaining money through the application of subsidies to public or private organizations, as they are quantities that the SME can achieve on a back-to-back basis or return in many years and with interests below the market. Some entities such as the ICO (Official Credit Institute), CDTI ( Center for Technological and Industrial Development ) or ENISA ( National Innovation Company ) are granting a lot of funding, above all to technology-based start-up companies. The downside is that usually very cumbersome and difficult to get requests.
Then we have the Reciprocal Guarantee Societies ( SGR ) that are financial entities that have agreements with the majority of the banks and that grant guarantees to their partners, demanding lower requirements than the banks, since their objective is not to make money by lending, but rather their The main mission is to get SMEs to obtain financing. The cost of the guarantee is usually between 1% and 2% and they have a study commission ranging from 0.5% to 1%.
There are also Business Angels and Venture Capital Companies , both figures offer financing to SMEs but they differ in that the former do it with their own money and the latter with money from others and have in common that what they are looking for is to make money by entering the market. capital of the company, but without intervening in the management, and sometimes, as in the case of the Business Angels, they also contribute knowledge and experience.
Now to finish, we’ll talk about quick loans, which are small amounts offered by some financial companies to cover small liquidity deficits but which we do not recommend because they are excessively expensive. They have an APR (Annual Equivalent Rate), which can go from 20% to 3000%, with a very short repayment term and with significant penalty costs if you delay a bit in the return of the loan. Some fast credit companies have been in the market for some time, such as Cetelem or Cofidis , but others are recently installed in Spain, such as Kredito24h , Wonga , Vivus , Que bueno , to name a few.