Participatory financing
Participatory financing is the collective effort made by a network of individuals to provide financial support, usually via an internet platform, for an individual or company. It generally provides leverage with banking institutions, and is of interest to companies that are having difficulty finding all the credit they need to complete a project.
What are the disadvantages?
Participatory financing can be a quick solution for bypassing the banking sector, but with interest rates 3 to 4 times higher than in a bank. This borrowing rate is higher than traditional sources of finance, but is justified by the lack of collateral and a riskier type of financing for investors (often through mezzanine capital).
What are the advantages?
Participative financing is characterised by the absence of guarantees (generally reserved for banks). In addition, the funds raised are considered as equity by the bank, which makes it easier to obtain co-financing from banks.
It can be of particular interest to companies that:
- face increased financial requirements in the near future (e.g. major investments);
- have already reached a high level of debt.
Crowdfunding
Putting investors (often small investors) in touch with creative and/or entrepreneurial projects (often start ups).
Crowdlending
This loan is aimed at SMEs and is often accompanied by institutional loans such as from banks.
Family – Friends – fools
Finding financing, when your project is still in its early stages. Find financial support from your friends and family to help you.
