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Business financing solutions: How to choose the right one?

Business financing solutions: How to choose the right one?

Temps de lecture : 5 minutes

Starting up or expanding a business often requires a suitable financing solution. In this complex entrepreneurial landscape, understanding and selecting the best option is vital to ensure healthy, sustainable growth.

Solutions for financing your business

Before getting started or considering expansion, it's essential to know the different options available to you. Here's a list of financing options for your business:

  • Personal contribution and love money

  • Factoring

  • Bank credit and microcredit

  • Le crowdfunding

  • Investment funds and business angels

  • Competitions

  • Inter-company loans

  • Le leasing

  1. Personal contribution and love money

Personal contribution is the amount of money that the entrepreneur invests from its own pocket in his company. It's a sign of confidence for financial partners, and an indicator of the entrepreneur's commitment to his project.

In addition, the love money "corresponds to funds lent or donated by close family and friends .

To maximize your chances of obtaining funding from your friends and family, prepare a solid business plan and be transparent about how the money will be used.

Benefits Disadvantages
Shows the entrepreneur's commitment and confidence Risk to personal savings
Generally faster, less formal process Can create tensions if the company is not successful
Financing costs are often low Amount generally limited

It is also possible to use a associate current account This is an account opened in the partner's name in the company's accounts. This formalizes the loan and defines the repayment terms.

2. Factoring

L' affacturage is a solution that allows a company to transfer unpaid invoices to a factoring company in exchange for immediate payment (usually a portion of the total invoice amount). The factoring company then takes charge of collecting the invoice.

Choose a recognized factoring company and make sure you understand the terms of the agreement, including any associated fees.

Benefits Disadvantages
Immediate liquidity Costs
Payment security Potential loss of control over customer relations
Optimizing receivables management and collection Dependence on the factoring company

Hero is an innovative platform launched in 2020, specially designed for startups, VSEs and SMEs, offering a accelerated payout" factoring system . You will receive Hero immediately calculates your invoice sales while your customer benefits from a payment term that you define . Hero simplifies the management of B2B transactions, while ensuring a smooth cash flow for suppliers.

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3. Bank credit and microcredit

Le bank credit is one of the most common means of financing companies.

Le microcredit, is designed to respond to specific small-scale financing requirements often aimed at entrepreneurs who have difficulty accessing traditional credit. You can find microcredit structures in the Banque de France directory.

  • Our tips for getting it:

For bank credit, it is crucial to have a business plan solide and a convincing financial projections.

Benefits Disadvantages
Adaptability: choice between different types of credit depending on needs (cash flow, investment) Unflexible repayment schedule
Access to large sums of money Need for guarantees (often personal)

Not all structures have easy access to credit: while the acceptance rate is over 99% for ETIs (over 250 employees), it is around 85% for VSEs, according to the Banque de France .

Hero provides for a financement de revenue-based financing . This is a form of financing in which the reimbursement is indexed to company revenues .

This can be particularly interesting for companies with fluctuating revenues: contact our advisors for more information.

Request a customized quote

4. Le crowdfunding

Le crowdfunding ou equity financing is a method of fund raising which allows individuals or companies to raise funds from a large number of people usually via specialized online platforms (kisskissbankbank, etc.).

  • How to do it :

The first step is to choose the type of crowdfunding best suited to your project:

  • presale

  • equity

  • crowdlending

Next, prepare a compelling presentation of your project, showcase it on a crowdfunding platform and be sure to promote your campaign via your networks and marketing channels.

Benefits Disadvantages
Validates market interest in your product or service May require considerable marketing time and effort to succeed
No refund for pre-sales (you offer a product or service in exchange) Risk of not reaching financing target and not obtaining funds

The amounts raised via crowdfunding vary enormously, from from a few hundred to several million euros .

5. Investment funds and business angels

Les investment funds and business angels are two major sources of financing for growing companies . While investment funds are generally entities managing the money of several investors, business angels are wealthy entrepreneurs who invest directly .

To attract the attention of these investors, your company must have a high growth potential A solid business plan and a competent management team. It is also essential to build a solid network Many introductions are made by recommendation. There are also networks such as France Angels which brings together more than 12,000 Business Angels

Benefits Disadvantages
Often provide expertise and a network in addition to financing Dilution
Potentially substantial investments Diligence process can be lengthy and intrusive

Business angels tend to invest earlier in the life of a company than investment funds . They are particularly well suited to startups and innovative companies in sectors such as technology and healthcare.

6. Contractor competitions

Les contest often organized by public institutions, associations or companies, give entrepreneurs the opportunity to present their projects and to compete for financial prizes, services or recognition .

Benefits Disadvantages
No need to sell shares in the company Highly competitive, requiring intensive preparation
Often offer networking opportunities Small amounts (often less than €5,000 per competition)

7. Inter-company loans

Intercompany loans enable one company to borrow directly from another without going through a financial intermediary.

Benefits Disadvantages
Often faster than bank loans Risk of dependence on another company
Flexible repayment terms Amounts often lower than with a bank
Can strengthen business relationships Potentially higher interest rates

8. Le leasing

Le leasing ou leasing allows a company to to use a good (vehicle, equipment, etc.) for a defined period , in exchange for periodic payments without being the owner. At the end of the contract, the company can usually buy the asset at a residual price.

Benefits Disadvantages
Provides access to the latest equipment without major initial investment Never becomes the owner (except for purchase option)
Payments are often tax-deductible Generally more expensive over the long term than direct purchase
Flexibility at the end of the contract (renewal, purchase, return) Fixed-term commitment with early termination fee

How can I get a business loan with no deposit?

Obtaining credit without a down payment is a challenge, but not impossible. It does, however, require convince the lender of the viability and profitability of your project . Here are a few tips to increase your chances:

  • Drawing up a solid business plan

It's your business card. It must demonstrate the profitability of your project, its coherence and its target market.

  • Building a financial reputation

Even without a downpayment, a track record of sound financial management and a stable financial situation can reassure lenders.

  • Offering alternative warranties

If you can't offer a down payment, other guarantees such as a surety bond or property may be useful.

  • Developing a network

Recommendations and word-of-mouth can open unexpected doors. Join entrepreneurial groups and participate in networking events.

Which bank should you choose for a business loan?

The best banks for a business loan are :

  • Crédit Mutuel

  • CIC

  • LCL

A significant advantage in the Crédit Mutuel at CIC and at BNP Paribas the credits can be validated directly in branch (up to a certain amount), without transmission and validation by the head office.

What type of financing is right for your company's industry?

Which financing solution for e-commerce?

Financing by affacturage is ideal, offering flexibility and rapid response to the fluctuating cash requirements typical of this sector.

Hero has a long history of working with e-tailers.

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How can SaaS be financed?

La fund raising is often the preferred option, as it enables substantial capital injections to support growth without monthly repayments.

What financing solutions are available for a DNVB (Digital Native Vertical Brand)?

Le crowdfunding is relevant: it provides funds while strengthening the community around the brand and validating the market fit of your product.

Which financing option is right for the size of your business?

What financing solutions are available for business start-ups?

Les honorary loans ou local grants and subsidies are often the levers of choice.

What financing solution for a small business under 3 years old?

Le equity financing is an excellent alternative for demonstrating the viability of a project and bringing a community together.

What financing solution for a fast-growing business?

La raising funds from investors is often the preferred choice to guarantee sustained growth.

What financing solution for a company in difficulty?

L factoring or the search for strategic partners to inject capital or buy out the company are options to consider.

What financing solutions are available for a business takeover?

Obtaining guarantees and additional financing from organizations such as Bpifrance can also facilitate access to bank financing.

Conclusion: which financing solution should you choose for your business?

The choice of financing solution largely depends on the company's industry, size and stage of development. Ultimately, the best corporate financing solutions will be the one that best meets the requirements and ambitions of your business. More often than not, cash flow financing is essential. Hero offers an effective solution that's simple to deploy.

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Frequently asked questions

What's the best source of financing for a company?

The best source varies according to the company's needs. Loans, venture capital or factoring may be preferred.

Bank loans remain the most common form of financing, accounting for around 34% of solutions adopted.

What is love money?

Love money refers to funds borrowed from family and friends to support an entrepreneurial project.

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Écrit par

Valentin Orru

Head of growth