Financing will also be needed if you realise that your profitability could be boosted in some way, e.g. by streamlining your manufacturing processes or if you want the company to grow. If the entrepreneur cannot finance the start-up or development of the company themselves, the alternative is to approach a financer, but it will be the company’s owners who will be liable in the first instance for the financial risk associated with investing their own capital. External financing forms can be split into loans, private equity and contributions. Banks and other lending institutions often offer company loans.
Anyone seeking to start up a company and apply for financing from banks and other lenders must have a carefully considered business plan and budget which they can present. If your application for financing is declined, it is a good idea to assess the lender’s reasons for rejecting your application. Perhaps you could change something in your business plan? Perhaps the company could obtain more collateral elsewhere or reduce the loan amount? You could of course also submit your application to another lender; different financers impose different requirements.
Private equity firms primarily finance companies which have the potential to grow rapidly, but they can also contribute capital at the early stage of a company’s development, when the risks are higher
Public sector financers usually require other co-financing, but they generally impose less demanding requirements regarding collateral than banks. A company’s intangible assets could constitute collateral which would make it easier to attract external financers.
Test your business
In the test, we will help you identify your intangible assets: