Advantages of an online loan for founders

Financing options for founders

Credit comparison platforms are not only reserved for citizens, they also help founders to get good credit. We recommend that every founder also compare financing options on the platforms. While not every comparison platform also specifies the subsidies and the loans running through them, these should not be forgotten. We will now present some options in addition to an online loan for founders.

1. KfW start-up loan

The Credit Bank for Reconstruction provides founders with more than just a loan. They vary in amount, but also in terms of conditions and requirements. There are two types of credit for founders:

• ERP start-up loan – start-up money – Founders can receive up to 125,000 eurosto implement your start-up project. The money is used to finance the running costs, but also for investments. KfW bears eighty percent of the credit risk. One advantage is that this loan does not require any equity and the application for funding can be made up to five years after the foundation. Permitted founders include business founders, freelancers, company successors and young and small companies.
• ERP capital for start-up – this loan amounts to up to 500,000 euros and serves to strengthen your own equity. The loan is only repaid from the eighth year, before that only interest payments take place. With this solution, too, the credit risk lies with KfW. However, the credit is limited in time. It can only be applied for up to three years after the company has been founded. This loan is geared towards founders who need to invest in equipment and expand their business.

summary

The KfW loans are to be applied for and calculated via the usual lending bank. They are usually also shown in the loan comparisons because they are easily compatible with the house bank.

2. Microcredit for entrepreneurs

These loans are certainly not suitable for setting up a large manufacturing company. But a photographer who wants to take off slowly can sometimes use the microcredit. An overview of the content:

• Height – the credit amounts to to a maximum of 25,000 euros.
• For whom? – Entrepreneurs from all sectors can apply for the microcredit. The prerequisite is the economic viability of the company. Small businesses, young entrepreneurs, micro-enterprises and freelancers are usually among the interested parties.
• conditions – the credits are reserved for business purposes and amount to a maximum of 25,000 euros. Gradual allocation is possible. If the previous microcredit has been repaid for at least six months at a time, a further credit can be applied for. However, only up to a total of 25,000 euros. The interest rate is 6.9 percent, the maximum loan term is 48 months. A special feature is the six-month grace period, which can be applied for.
• application – it is done through a microfinance institution. First, the viability of the company is assessed, then a recommendation for funding is made.

3. Self-employed loans

Banks consider the self-employed to be a risk customer group, as income often fluctuates. However, there are certainly loans and online loans aimed at the self-employed. They don’t always come directly from a bank. The comparison portals also contain offers that fall under crowdlending or P2P, but are processed through an intermediary that acts as a bank. But what are the requirements?

• independence – Self-employment of two or three years is often required. However, this does not necessarily have to have been located in the current area.
• requirements – Self-employed persons must submit their tax returns and balance sheets to prove their income. It is not uncommon for guarantees or other securities to be necessary.
• Cost – The providers usually have the higher risk paid for by a slightly higher interest rate.

What are the general advantages of an online loan?

There are a number of advantages of an online loan. Some of the advantages are invaluable, others only really become apparent in hindsight. Some examples:

1. Fast application

Anyone who has ever taken out a normal loan knows that customer appointments are necessary. There is advice, then the agreements have to be checked in-house, at some point the customer receives the loan application – only then is it processed. And online loans?

• Direct request – the customer requests the loan right away from the comparison. Depending on the type of loan and the bank, he will receive an approval or rejection within an hour, others need a little longer and offer a specific loan offer.
• Direct Submission – the first data is transmitted as soon as the request is made. Usually a questionnaire has to be filled out, along with a copy of the identity card. Other providers already want payslips or other proof of income. These are the ones who work right away with an offer tailored to the customer.
• speed – if the offer is accepted, online loans are often very quick. Since everything is done digitally, from the documents to the signature, founders can sometimes have the money in their accounts in two days.

2. Opportunities for comparison

A loan comparison on the Internet is nothing more than comparing TV sets, electricity tariffs or car insurance tariffs. With just a few entries, founders receive a list of the loans that match their entries in no time. This means:

• overview – founders can get an idea of ​​the possibilities at a glance and decide for themselves which provider is expensive or cheap. That’s how you can Favorable interest rates for your own company Find.
• Details – with one click on the details, founders save time and work. Because the award details are mentioned here. If a lender only accepts self-employed people who have been running the company for five years, this offer is not relevant for founders.
• promotions – they too are sometimes included in the comparisons. Many a self-employed person learned about the comparison of funding opportunities that they had never heard of before.

3. Prior determination of desired services

Online loans can often be customized. Borrowers decide on the term and thus the amount of the installment, but other points can also be integrated into the contract. However, it can be expected that the lender will refuse some desired services. Many advantages are reserved for pure standard loans. But what is behind these points?

• rate breaks: There is the possibility to cover the loan with a safety net. This allows the installments to be suspended for a certain period of time. This extends the runtime. Whether this option also benefits founders must be asked individually.
• special repayments: – Special repayments are already possible free of charge, but they can be limited in form and scope. In some cases, early replacements are also possible free of charge. Again, founders have to check for themselves whether this applies to them.
• Rein digital: Pure digital loans boast an incredibly fast payout time. Sometimes the money is in the account 36 hours after the loan request. Founders are sometimes at a disadvantage here because lending is not standardized. While an employee only uploads the payslips or releases the account view, the self-employed sometimes have to check balance sheets.
• exceptions: There are loans purely for the self-employed that come from fintechs. The PayPal loan, for example, uses the business income via PayPal as a basis for verification, which is why this loan is ideal for founders who primarily process their products or services via PayPal.

Alternative forms of financing for founders

Funding for founders rarely comes from a single source. Often this would not make sense either. Because if funds can be acquired privately and the need for credit is reduced as a result, this solution is cheaper. But what are the options?

• family – Loans from family members, whether from parents or other relatives, are common. The private loan agreement that secures all sides is important. Of course, the parents can still do without a repayment, but the contract still protects them.
• friends – with them a contract is even more important, because as is well known, friendship ends with money.
• investors – when looking for investors, it all depends on your own business idea. Especially innovative business ideas with unique selling points are very interesting for so-called business angels. On the one hand, such investors inject capital, but on the other hand they also support founders with their know-how and their network. Anyone who has already managed their company for a while can do so too Establish contacts with venture capital companieswho trade shares for a capital injection. However, as shareholders, such companies also want to have a certain say in the matter. Because of this, onboarding investors is always a procedure that founders should carefully plan and think through.
• crowd investing – It is comparable to crowdlending, except that it is either an individual investor who is searched for via the Internet or an online association of many investors. There are a number of portals where small investors can register and invest in a pool through which such investments are made.

summary

When looking for investors, founders need a good business plan and an excellent pitch. Even with crowd investing, private individuals choose the companies that convince them. Sometimes the pitch is also the prerequisite for acceptance as a founder on the platform.