Differences between private financing and public financing: which one to choose?

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When it comes to seeking financing for business development, there are currently numerous avenues of public and private funding. If you are part of the financial area of a company, you will probably be interested in knowing what type of financing is most convenient for your business. Therefore, in this post we want to explain the differences between private financing and public financing.

Differences between public financing and private financing

Next, we will present the differences between public and private funding, so that this helps your company to choose appropriately how it is going to be financed:

  • Interest rate of the loan obtained: In the case of public funding, he type of interest takes as a basis the Euribor, plus a percentage which varies between 0% and the 1,5%. On the other hand, in the private financing loans include higher interest, in addition to that they depend on the size and history of the company.
  • loan advances: For the loans from public entities, there is the possibility of obtaining a advance of up to 50%, without the need for guarantees.
  • lack of loan: The loans for business granted by organizations private generally they have no deficiency. However, the public loans if they enjoy a grace period, which usually oscillates between 1 and 3 years from the end of the project.
  • Non-refundable Tranche (TNR) of the loan: Inside of public funding, sometimes the money lent includes a aid, consisting of a TNR between 5% and 33% of the loan. This loan TNR is a percentage of the total thereof that is not returned.
  • Appearance at CIRBE: The CIR is the Risk Information Center. The Yofinancial instruments from public entities do not appear in said body. However, the financial instruments awarded by private companies if they appear at the Risk Information Center.
  • Obtaining the innovative SME seal or motivated reporto: Speaking specifically about the public funding, depending on the project financed, it is possible to get certificates of the activity carried out in R+D+i. Said certificates make it possible to make tax deductions of up to 40% of the amount of the project in question.
  • Minimum loan amount: In order to access public funding sources, he project to finance must have a higher amount to the €100,000 or the €175,000. In addition, it should be noted that public loans cover only a Project 75%. However, in the private financing there is no minimum amount to be able to access a business loan, in addition to being able to cover the entire project.
  • additional guarantees: The public organizations they can demand additional guarantees, after analyzing the financial stability and size of the company. On the other hand, the private entitiesIn addition to these guarantees or additional guarantees, sometimes they also demand acquire some Obligatory insurance.
  • expense audit: He publicly funded project must be audited by ROAC auditors. In addition, it is requested a lot of transparencyto the company in its payments and pending invoices, the control level is very high. On the contrary, the Projects subjected to private financing does not require of audits nor of proof of expenses, since there is no need to present budgets, deadlines, etc. to public organizations.
  • Obtaining the borrowed money: In the public loans, what is obtained is the advance, and within a period of 2 to 3 months from the request (The rest of the amount of the loan is obtained with the completion of the project). Instead, with the private financing for companies you get the money in days either few weeks from the request.
  • Access to public subsidies: Certain Grants granted by the public administration are incompatible with obtaining public funding. However, the private financing For businesses if allowed to benefit of any of the grants existing.

Which to choose?

When answering the question:Between public and private financing, which one should I choose for my business?one has to take into account the particularities of each company in question. Therefore, what we recommend is to consult experts in the financial sector, so that they can help you select the best source of financing for your business.


Each existing source of financing has its particular characteristics, which make it fit better in some companies than in others. Therefore, showing the differences between private and public funding, we hope we have helped your financial instrument selection process.

Even so, as we have already mentioned, We recommend consulting experts in financial advice. At Alter Finance, we trust that our staff can help you when choosing the most appropriate financing for your company. contact us when you need it.

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