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Dear Colleague,
After carrying out a study for one of our clients about funding options available on the market I have realised the financial industry needs improvements.
Of course a lot depends on the amount of funding requested, however this is a summary of results obtained.
We assessed several funding options starting from banks that usually offer loans or overdrafts.
Differently from the beginning of this century and following the huge economic crisis banks now require proof of assets to lend money more easily.
For small amount of money it is possible to use credit cards as a short-term funding pot, although revolving cards should be used carefully as it is then difficult to pay the outstanding sum back due to the interests charged.
When companies have ambitious goals in mind such as new products/services we always advise them to take into account the range of opportunities offered by the European Commission and, in particular, those ones included in Horizon 2020 such as calls for proposals in their specific fields (ICT, Transport, Energy, Environment, Food&Agriculture, etc.), the SME Instrument specifically addressed to SMEs that can participate alone and the Fast Track to Innovation tool that has the advantage of requiring a mini-consortium of 3 to 5 partners.
Additional funding opportunities are available at the
European Investment Bank in several ways from micro-finance and loans to equity and funds investments.
Then there are
Business Angels and
Venture Capitalists in case ideas are eligible to obtain their financial help. Purposefully we didn't consider crowdfunding platforms that were not suitable to the scope.
Finally, there are financial companies that try to complement banks: some provide streamlined loans at higher rates, also for brief periods (i.e. 3 months),
others anticipate the value of companies invoices (i.e. Invoice Factoring), while some others decide the size of loans in proportion to the amount of sales paid by credit/debit cards (i.e. Merchant Cash Advance). What the latter don't understand is that - apart from high street shops and conferences organisers - very few companies accept payments by cards.
In particular, those companies that usually receive payments of thousands of Pounds/Euros as well as others that deal with public bodies or large organisations cannot accept payments by cards, which means they cannot enjoy these funding opportunities.
This is why I said some improvements in the financial industry are needed: there would be a good number of companies, SMEs in particular, that would be happy to enjoy these financial services but restricting the range of potential clients to those that trade by cards, smells of old times while the kinds of modern business active or starting up in these days need a more versatile and up to date range of financial lenders.
Feel free to send your comments to:
Editorial(at)EPNconsulting.eu
Founder, CEO
Twitter: @stefmai
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