SMEs, find the right tool to finance yourself: What alternatives to bank loans are offered by financing platforms?
Digital offers to find financing have multiplied for SMEs: participatory financing, equity financing, private debt... They correspond to very different realities, do not finance the same needs and especially are not provided by the same investors.
How to find your way through all these offers, and in particular, how to find the right financing tool for your situation?
Here are some answers.
Participatory financing platforms (crowdfunding, crowdlending, crowdequity, reward equity): financing not exceeding an average of 1 million euros provided by a community of individuals
Participatory financing is defined as an exchange of funds between individuals, outside the « institutional » financial circuits, in order to finance a project on an online platform. The financing tools are multiple: loans with or without interest (« crowdlending »), securities (bonds or shares - « crowdequity »), or even donations (« reward crowdfunding »).
The amounts of funding are also very variable, always remaining below the legal ceiling of 8 million euros.
Behind this multitude of products, two legal statutes defined by law, that of « participative investment advisor » or « intermediary in participative financing ».
Recent studies make it possible to draw to which type of financing, in terms of amounts, corresponds each type of platform of participative financing:
- Donations (« reward crowdfunding »): The average amount of funding in donations is between 3,000 and 5,000 euros, the unit amount of donations not being capped.
- Loans (« crowdlending »): The average amount of financing obtained on crowdlending platforms is between 1,000 and 200,000 euros, the amount of loans per investor being capped at 2,000 or 5,000 euros (depending on whether the loan is remunerated or not).
- Bonds/equities (« crowdequity »): The average amount of financing projects obtained in bonds or equity on participatory financing platforms is between 40,000 euros and 500,000 euros, for an average unit investment amount of between 5,800 and 7,700 euros (uncapped).
In terms of sectors of activity, participatory financing platforms are generally multi-sectoral, but there is a strong trend towards specialization, particularly in the real estate and renewable sectors.
Finally, as far as registered investors are concerned, financing is in principle provided by individuals, for relatively small unit amounts, sometimes supplemented by funds backed by the participatory financing platform.
FirmFunding, the only financing platform that makes it possible to structure needs of more than 1 million euros and to get in touch with professional investors
FirmFunding, the first and only funding platform dedicated to private placement, allows SMEs to put their financing project online, after having helped them structure their need between all categories of high of balance sheet financing (pure private debt - dry bond, equity, equity/debt mix, revival bonds), and to present it to registered professional investors (over 300; divided between management companies and family offices or multi family offices).
In order to meet the requirements of professional investors and to allow SMEs to get in touch with them to find the most suitable solution for their situation, the FirmFunding teams provide their expertise and assist and advise SMEs on the points to be developed and highlighted (existence of guarantees promoting the security of the project, clarification of certain sectoral specificities, highlighting of strengths, explanations of what could appear as weaknesses). They help SMEs to determine :
- what financing solutions are available (for example, the PPSE and stimulus bond schemes are not open to all SMEs)
- what is the most suitable financing solution for the SME, depending on its repayment capacity, the founder's willingness - or not - to be diluted, the purpose of the financing project…
Contrary to the financing accessible via participative financing platforms, FirmFunding thus allows SMEs :
- access to high of balance sheet financing, not necessarily dilutive and repayable at maturity (which preserves cash flow)
- of an amount greater than €1 million and uncapped
- provided by professional investors, who are generally accustomed to taking on all of the financing, and who are likely to provide SMEs with the benefit of their business and technical expertise in the context of real support.
If you want to set up a financing of more than 1 million euros and are looking for a professional investor to accompany you in your development project, do not hesitate to get in touch with the FirmFunding teams, we can help.
- By email via the contact form