How to finance your VSE?

Le financing a small business is a crucial stage in the life of a company. There are various options, from self-financing to bank loans and investors. Choosing the right strategy depends on a number of factors, such as the nature of the business and specific financial needs.

Find out in this article how to tackle this crucial step.

Different types of financing for very small businesses

Visit TPE have several financing options, including :

Bank financing

Bank financing consists of obtain a loan from a bank to finance your project. It has the advantage of not diluting the company's capital, but it does involve interest payments and the provision of guarantees. Bank financing can be supplemented by other schemes, such as :

• The honor loan

• Business start-up loan

• Microcredit

Participatory financing

Participatory financing, or crowdfunding, is a form of financing based on the contribution of numerous individuals via an online platform. Il There are several types of participatory financing, depending on the consideration offered to contributors:

• The gift

• The reward

• The loan

• Capital investment

Le equity financing allows you to mobilize a community, test your market and benefit from visibility.

Public funding

Public financing includes financial assistance from the French government, local authorities or public bodies to VSEs. These may include :

• Subsidies

• Tax or social security exemptions

• The guarantees

• Investment funds

• Specific schemes such as the research tax credit or the status of young innovative company.

The aim of public funding is to support the creation, development and innovation of very small businesses.

Internal financing

Internal financing corresponds to the company's own resources, i.e. partners' contributions, reinvested earnings or self-financing . It is the most important source of financing for very small businesses, as it does not require recourse to third parties, and is a sign of the company's financial strength.

How do you choose the right type of financing?

To choose the right type of financing, it is essential to consider several factors:

Depending on your needs

Here are the key questions to consider:

What is the purpose of your financing?

Depending on whether you're looking to finance an investment, working capital requirement, innovation or business takeover, you won't have the same financing options. For example, participatory financing may be suitable for an innovative or creative project, while bank financing may be more appropriate for a material investment.

How much do you need?

The amount of your financing will determine the possible sources of financing. For example, if you need a small amount, you can opt for a micro-credit or an honorary loan. If you need a large sum, you can apply to an investment fund or a bank.

How long do you want to repay your loan?

The term of your loan will influence the cost and feasibility of your financing. For example, for pay off your loan quickly If you want to pay back your investment over a longer period of time, you can opt for bank or public financing. On the other hand, for long-term repayment, you can opt for bank or public financing.

Depending on your financial situation

Your current financial situation will determine which financing method you choose. Here are the questions you need to ask yourself:

What are your sales figures?

Your sales will reflect the profitability and viability of your business. It will also determine your access to certain sources of financing. For example, if your sales are high, you'll be more likely to obtain a bank loan or public assistance, whereas if your sales are low, you'll have to rely on your own funds or participatory financing.

What's in it for you?

Your profits will represent your company's ability to generate profits and self-finance its development . They will also determine the risk level of your financing. For example, if you have high profits, you'll be able to repay your loan more easily and offer guarantees to your financiers. But if your profits are low, you'll need to use more flexible sources of financing.

Do you have any guarantees to offer?

Guarantees are elements that reassure lenders of your ability to repay your loan in the event of default . They can be personal (guarantee, mortgage) or professional (pledge, collateral). They will influence the rate and terms of your financing. To be able to offer guarantees, you need assets on your balance sheet.

Depending on your objectives

Here are the right questions to ask yourself:

Would you like to invest in your company?

If you wish to acquire goods or services that will increase the company's productivity, you will need to choose a type of financing suited to the nature and duration of your investment . For example, to invest in equipment, you can opt for leasing.

Would you like to start your own business?

If you want to launch a new business on the market, you'll need to choose a type of financing that will support your start-up and help you grow. For example, to set up an innovative or high-potential business, you can approach an investment fund or a crowdfunding platform.

Would you like to expand your business?

If you want to increase your sales, customer base or brand awareness, you'll need to choose a type of financing that will support your expansion and strengthen your competitiveness. For example, to develop your international business, you can take out prospecting insurance or an export loan.

How to obtain VSE financing

These steps will guide you through the process of obtaining financing for your VSE.

Putting together a financing file

To obtain VSE financing, you need to put together a financing application presenting your project, your business and your financial situation.

What documents do you need to provide?

The financing file must contain the following documents:

• A business plan that describes your business, your objectives and your financial needs

• A financial forecast with three-year forecasts, a balance sheet and a cash flow plan

• A financing table which summarizes the sources of your financing and your loan repayment schedule.

• Market research which analyzes demand, opportunities and threats in your business sector

• Supporting documents which attest to your address, your tax situation and the legal status of your company

How do you present your case?

To submit your application, you must comply with the following rules:

• Be clear, precise and concise . Use simple, professional language.

• Be consistent and realistic. Check that your figures are consistent with each other, and don't overestimate your forecasts or underestimate your needs.

• Be convincing and enthusiastic . Highlight your project's strengths, market opportunities and key success factors.

Find a financial institution

To find a financial institution willing to grant you VSE financing, you need to compare offers and negotiate loan conditions.

How can I compare offers?

To compare offers, consider the following criteria:

• Loan amount It must correspond to your real needs and your ability to repay.

• Loan term It must be adapted to the nature and profitability of your investment.

• Loan rate It can be fixed or variable, and must include the nominal rate and the total effective rate (TEG).

• Loan charges These may include administration fees, insurance costs and guarantee fees.

How to negotiate loan terms

The following rules must be observed when negotiating loan conditions:

• Be prepared and informed. Make a comparative study of the offers available on the market and anticipate the banker's questions and objections.

• Be confident and professional. Present your case with confidence and clarity. Argue with facts and figures. Respect deadlines and commitments.

• Be flexible and open . Listen to the banker's proposals and discuss them with him. Try to find a solution that suits both parties.

How can you find financing for your very small business easily and without having to put together an application?

Today, it's possible to finance your very small business without having to put together a dossier or chase capital on crowdfunding platforms.

Pay your suppliers later with Hero

Hero is a payment solution that offers deferred and split payments. This means you can order your goods/services from your suppliers and pay them after 30 or 60 days . How can you do it? Hero advances you cash without difficulty

In this way, Hero meets a twofold concern: preserving the buyer's cash flow, while providing the seller with the liquidity to operate with peace of mind. On both sides of the transaction, Hero offers a significant advantage.

By paying your suppliers in instalments or on a deferred basis, optimize your cash flow .

Cash in faster with Hero

Hero's split and deferred payment system works both ways. It's no secret that when it comes to B2B commercial transactions, you can never be sure of immediate payment. marketplace the time it takes to cash in varies according to various parameters:

• Delivery time

• The reserve period

• Transfer deadlines

• Etc

As a result, payment times on a marketplace vary from 20 to 30 days .

Using Hero, you won't have to no need to worry about DSO . Indeed, the platform advances you the amount of your sales immediately the day after the sale is validated . In addition What's more, the solution integrates with leading marketplaces such as Cdiscount, Amazon and Darty.

On the other hand, with Hero, your customers can order now and make a split payment later. Such a feature is also a selling point that will boost your conversion rate. On the other hand, you get immediate payment from the platform.

Pitfalls to avoid

Here are the pitfalls to avoid when applying for VSE financing:

Not comparing offers properly

It's not just a question of looking at the loan rate, but also at all the fees, guarantees, terms and conditions of repayment. It's a good idea to take advantage of the competition and ask for several quotes.

Do not include ancillary costs

In addition to interest rates, it is essential to take into account additional costs that may be associated with the loan. These may include:

• Application fees

• Insurance costs

• Penalties for early repayment

• Etc

These costs can have a significant impact on the total cost of financing.

Breach of loan conditions

Failure to follow loan conditions to the letter can have serious financial consequences. It could lead to penalties, higher interest rates, or even termination of the loan. It is imperative to understand and respect all the clauses set out in the loan contract.

In conclusion, obtaining financing for your very small business is essential for its development. It's crucial to assess your needs, financial situation and objectives. Comparing offers, considering ancillary costs and respecting loan conditions are essential steps. In short, a clear understanding of the VSE financing is the key to ensuring the growth and longevity of your small business.

Other articles on the same subject:

• Reverse factoring: what is it?

• Business cash loans: optimize your cash flow

• Revenue based financing: what exactly is it?

• How to finance and optimize working capital requirements?

• Alternative financing: everything you need to know from A to Z

(As well as many other fascinating articles here)