Due to the pandemic crisis that we are experiencing, many companies see their business in danger and need resort to aid to continue continuing with your economic activity. There are many ways to achieve the desired financing, and that is why in this article we are going to talk to you about the sources of financing against Covid-19 that you have at your disposal.
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Financing sources in the face of Covid-19: What options do I have?
ICO Loans
The ICO loans are lines of public funding aimed at helping finance projects of self-employed workers, entrepreneurs or small businesses.
Is about annual calls They have a limit of loans that each participant can request. To be eligible for them, it is important present a detailed financing report to make clear the quality of your company and the objectives for which you need to request said help.
Although it is a public financing channel, loans are managed through private credit institutions. The Official Credit Institute establishes agreements with the savings banks that will be in charge of carrying out the operations and guarantees that will end with the granting of the aid. But despite this, it is you who decides which branch to go to to request the loan.
If you want to know all the advantages of using ICO credit lines can consult this article.
Alternative financing sources
The non-bank financing sources They are a great solution for those companies or self-employed workers who cannot afford to resort to public loans because they do not meet certain requirements or because the loan interests imposed are too high. To overcome the crisis due to the pandemic, these are the best alternative financing options you can turn to:
- Leasing: Leasing is a financial lease contract with purchase option. Leasing gives you the possibility of renting a product for a period of time, being able to buy it at the end of the contract. It is intended for both companies and the self-employed and lasts between 2 and 4 years.. In the event that you do not want to acquire the asset at the end of the leasing contract, you will only have to return it.
- Renting: Renting is an option similar to leasing, with the exception that it is a rental of assets without option to purchase. It is usually intended for high cost goods, but you can purchase almost any product through this means. Its duration ranges between 2 and 5 years, which is what is usually agreed upon as the useful life of the product. Signing a leasing contract that exceeds the life cycle of the product would be a mistake, especially when it comes to technological devices.
- Factoring: Factoring is a financial tool that helps companies advance the collection of outstanding invoices before the due date. This is a very practical option for a company to obtain the liquidity it needs to carry out other tasks. The factoring requesting company You will receive a credit as an advance on invoices while the company facilitating the service will be in charge of requesting collections from the debtor companies.
- Confirming: It is an aid similar to factoring, but it works precisely the opposite. Confirming is a tool that helps companies meet outstanding payments with their suppliers. The financial institution takes charge of the pending payments, thus contracting a debt with the client instead of with the suppliers. It is a very useful tool for maintain the image and reliability of the company, that will be always up to date with pending payments, eliminating debts.
- debt funds: It is a tool whose purpose is to grant loans to companies. Private financing entities grant loans to those companies that resort to them because they cannot meet the banks' requirements or because they offer greater payment flexibility. Furthermore, the interest percentage is imposed by the investor, so there is a room for negotiation so that both parties agree on the guarantees and requirements of the loan.
- Stock financing: When a company has an overload of inventory that it cannot dispose of, stock financing is a tool that can help solve this problem. Through this route a company that needs to obtain liquidity quickly to continue expanding you can obtain a credit for the value of products that are in paralyzed stock and use that money for whatever you need. It is a kind of “pledge” of products whose main purpose is that at some point they will be marketed.
Alter Finance, experts in non-bank financing.
If you need to resort to non-bank financing aid, at Alter Finance we can help you turn your business around. Alternative financing is a good option when you cannot meet the requirements or interests imposed by traditional banking., and which in many cases represent very advantageous benefits for companies depending on the tool used.
Consult with us without obligation. We offer you a individualized and personalized advice to find the solution that best suits your needs.