Alternative funding sources

Maximizing alternative sources of finance becomes crucial to ensure the viability and growth of businesses.

In the current business landscape, it is more important than ever to have alternative sources of funding because of rumors that certain actors are freezing funding and that obtaining it has become more difficult. Given this situation, maximizing alternative sources of financing becomes crucial to ensure the viability and growth of businesses.

Among the options available, we find various sources of financing that can be very useful for companies.

Here are some of them.

Public funding

There are many sources of public funding, such as at the local, regional, national or European level. These can take different forms, such as grants, soft loans and tax incentives. 

However, it is important to bear in mind that the preparation of projects can be tedious and that an innovative proposal and justification are required to access better conditions. Despite the challenges, maximizing public funding opportunities is critical. 

Many public financing options are available. Enisa is a public company dedicated to financing viable and innovative business projects of Spanish SMEs through loans.

Another option is R&D&I Tax Deductions, which aim to reward the effort made by companies in developing innovative activities. These deductions are particularly interesting, as they are applied directly to the tax payment, which considerably reduces the amount to be paid.

In addition, Spanish companies whose projects have been selected in the International Calls of the different ERA-NETs can obtain funding at national level through two CDTI instruments, E.P.

Another option is loans for European Technology Cooperation R&D projects. These soft loans include a 33% non-refundable tranche and finance ERA-NET projects selected under the Additional Calls, without co-financing from the European Commission.

Having specialist consultants can be a great help in ensuring you get the public funding you can expect.

¿Cómo prepararte para una auditoría?

Bank financing

Although it is important to diversify funding sources, bank financing cannot be ruled out. At a time when funding rounds are closing, it is advisable to seek help to supplement them, as this option usually offers lower interest rates compared to other methods. Although bank loans are usually not very large, interest is currently low, although interest is expected to rise in the future.

Venture Debt

It is an intermediate approach between debt and equity. It is a more complex option and is usually suitable for consolidated companies since it is likely that the amount they can lend you is greater. However, it is important to note that this type of funding can be costly. In addition to being a less standardized process. It is recommended to analyze several suppliers, request referrals and get proper advice before making a decision.

Revenue-based Financing

This modality is gaining popularity due to its operation. In this type of financing, the entrepreneur pays an additional amount to the loan received, but based on a percentage of their monthly income.

In this way, if the startup experiences a rapid growth, the payment is done in an agile way, while if the growth is slower, the payments extend over time. This modality is very beneficial and, in general, several loans are granted in this format. This form of financing is traded raw and applies especially to ecommerce. In addition, conditions are established based on favorable economic aspects.

It’s a relatively new form of funding that you could only find in America until two years ago. In Spain one of the most popular providers in this area is “Ritmo”, which offers this type of financing with satisfactory results.

Capchase

This is a similar model to the previous one. It consists of offering you an advance on the money you are expected to bill in the next 12 months, or a portion of it. Then, the company returns this outstanding balance over the 12 months depending on the income it generates. This approach makes it possible to maintain a balanced cash flow and the funding ceiling grows as income increases.

In addition, you can keep it through new requests and a live balance that is very beneficial. It is true that this model is probably the only option with which you can manage a round of financing without having to raise as much volume as other financing options.

Tax Lease

It is important to be informed about the various financing options that exist for startups and not leave decisions to chance. Having a CFO (Chief Financial Officer) can be instrumental in evaluating the options available and making strategic decisions that drive the company’s growth.

In conclusion, in a constantly changing business environment, maximizing alternative sources of finance becomes essential. Diversifying financing options, leveraging both public and private sources, can help businesses overcome current challenges and ensure their long-term success.

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Alternative funding sources

In the current business landscape, it is more important than ever to have alternative sources of funding because of rumors that certain actors are freezing funding and that obtaining it has become more difficult. Given this situation, maximizing alternative sources of financing becomes crucial to ensure the viability and growth of businesses.

Among the options available, we find various sources of financing that can be very useful for companies.

Here are some of them.

Public funding

There are many sources of public funding, such as at the local, regional, national or European level. These can take different forms, such as grants, soft loans and tax incentives. 

However, it is important to bear in mind that the preparation of projects can be tedious and that an innovative proposal and justification are required to access better conditions. Despite the challenges, maximizing public funding opportunities is critical. 

Many public financing options are available. Enisa is a public company dedicated to financing viable and innovative business projects of Spanish SMEs through loans.

Another option is R&D&I Tax Deductions, which aim to reward the effort made by companies in developing innovative activities. These deductions are particularly interesting, as they are applied directly to the tax payment, which considerably reduces the amount to be paid.

In addition, Spanish companies whose projects have been selected in the International Calls of the different ERA-NETs can obtain funding at national level through two CDTI instruments, E.P.

Another option is loans for European Technology Cooperation R&D projects. These soft loans include a 33% non-refundable tranche and finance ERA-NET projects selected under the Additional Calls, without co-financing from the European Commission.

Having specialist consultants can be a great help in ensuring you get the public funding you can expect.

¿Cómo prepararte para una auditoría?

Bank financing

Although it is important to diversify funding sources, bank financing cannot be ruled out. At a time when funding rounds are closing, it is advisable to seek help to supplement them, as this option usually offers lower interest rates compared to other methods. Although bank loans are usually not very large, interest is currently low, although interest is expected to rise in the future.

Venture Debt

It is an intermediate approach between debt and equity. It is a more complex option and is usually suitable for consolidated companies since it is likely that the amount they can lend you is greater. However, it is important to note that this type of funding can be costly. In addition to being a less standardized process. It is recommended to analyze several suppliers, request referrals and get proper advice before making a decision.

Revenue-based Financing

This modality is gaining popularity due to its operation. In this type of financing, the entrepreneur pays an additional amount to the loan received, but based on a percentage of their monthly income.

In this way, if the startup experiences a rapid growth, the payment is done in an agile way, while if the growth is slower, the payments extend over time. This modality is very beneficial and, in general, several loans are granted in this format. This form of financing is traded raw and applies especially to ecommerce. In addition, conditions are established based on favorable economic aspects.

It’s a relatively new form of funding that you could only find in America until two years ago. In Spain one of the most popular providers in this area is "Ritmo", which offers this type of financing with satisfactory results.

Capchase

This is a similar model to the previous one. It consists of offering you an advance on the money you are expected to bill in the next 12 months, or a portion of it. Then, the company returns this outstanding balance over the 12 months depending on the income it generates. This approach makes it possible to maintain a balanced cash flow and the funding ceiling grows as income increases.

In addition, you can keep it through new requests and a live balance that is very beneficial. It is true that this model is probably the only option with which you can manage a round of financing without having to raise as much volume as other financing options.

Tax Lease

It is important to be informed about the various financing options that exist for startups and not leave decisions to chance. Having a CFO (Chief Financial Officer) can be instrumental in evaluating the options available and making strategic decisions that drive the company’s growth.

In conclusion, in a constantly changing business environment, maximizing alternative sources of finance becomes essential. Diversifying financing options, leveraging both public and private sources, can help businesses overcome current challenges and ensure their long-term success.