Fast switching without a bank
For many years, providing loans to companies, was the exclusive domain of banks. For a long time, large and small companies had only one option for getting a loan to invest in machinery or take over a competitor, for example. In recent years, that situation has changed at a great pace. Traditional banks have become increasingly reluctant to grant loans and the procedures for a financing application often take months. By then, the opportunity for the entrepreneur could be gone. The gap between supply and demand was filled by other parties. The first lenders were large parties that provided loans of tens of millions in acquisitions of many hundreds of millions. Without bank intervention. This gave birth to Direct Lending, non-bank financing where the money comes from institutional investors. There are now dozens of new providers on the market, some focusing on medium-sized and large companies and providing loans of €1,000,000. Others focus precisely on smaller companies and provide loans of up to €250,000, for example.
Conditions
With all parties, the exact terms are different, but broadly speaking you can stick to these:
- The company must at least 2 years of existence; for some forms such as overdrafts, this is often 3 years.
- Operating profit in the last and current year must be positive are.
- Operating turnover from € 500.000.
- Interest rates from 6%, rising to 9%.
- Suitable for investment, growth, real estate and sometimes acquisitions.
Advantages
Direct Lending gives advantages over other forms of non-bank and bank loans:
- You can borrow money quickly thanks to efficiently designed processes. Sometimes the money is available within just one or a few weeks.
- Direct Lenders require no or little collateral. As a result, this form of financing can also be used alongside existing bank financing.
- With Direct Lending, there is often the option to redeem without penalty after a short period or, for example, to withdraw the redeemed part again.
- There is little to no red tape.
- You do not need to attract an investor for further growth and therefore you keep full control of your business.
What should you pay attention to?
This form of financing requires a solid knowledge of the market. What are the possibilities, what are the conditions of lenders and how can you write an application in such a way that the lender can also make an offer quickly? It is also important to identify additional costs such as closing commissions. Seek advice from a reliable partner who preferably deals with existing and new financial parties on the Dutch market on a daily basis. Xolv will be happy to advise you!
