Loans from private investors
Loans from private investors are becoming progressively well known among medium-sized companies(Capital privado)
Loans from private investors can be an alternative to the house bank. Interest rates are significantly higher with this sort of financing - yet there are situations in which the so-called private obligation loans are still advantageous.
For a long time, there was no route around a house bank for a medium-sized company. And the long-standing bank the advisor is still the first address for many, medium-sized companies with all questions about money. Be that as it may, the competition is growing - and courting attention.
Private investors are increasingly replacing banks as lenders for corporate finance. With this type of financing, which is known as private obligation, institutional investors such as insurance companies or pension funds lend money to entrepreneurs in the long term. "In the private value environment, private obligation has effectively established itself as an alternative type of financing. Medium-sized companies are also increasingly
examining such financing, "says Johannes Schmitt, Managing Director of the Frankfurt office of the investment bank GCA Altium. SMEs mainly use private obligation for development capital or takeovers.
Less regulation
The business is usually handled by an investment company. The main difference between private obligation and bank credit: There are no standard repayment rates for loans from private customers. Instead, the entrepreneur
negotiates the hour of the installments according to his individual needs and options, or he only repays the entire loan toward the end of the term. This adaptability in the repayment system is, in any case, appealing for investors: depending on the structure, up to 10 percent interest is charged on a private obligation loan. Bank loans are currently between 2 and 3 percent.
There are several reasons why this moderately new type of financing is becoming increasingly well known with medium-sized companies. This is incompletely because of a decision made by the Federal Financial Supervisory Authority providers of private obligation loans have been permitted to issue loans without a banking
license. "With this, Bafin has brought private obligation out of its shadowy existence," says Andreas Doerfert, managing chief of the HF Private Debt fund. Previously, investors were in a legitimate hazy situation. They ran the risk of being classified by Bafin as a credit institution within the meaning of the German Banking Act. Then they should have followed the banking regulation.
The opportunity not to need to agree to the regulations that have been tightened since the 2008 financial crisis is an important advantage for private obligation providers. As a result, private investors can grant loans that are not beneficial for banks. "This is an extremely positive development because additional liquidity is accessible," says
Schmitt.
Be that as it may, private obligation can not only be advantageous for small and medium-sized companies who - for creditworthiness or different reasons - find it hard to obtain bank loans. In development phases specifically , it pays off if(préstamos particulares)
companies invest additional capital and don't use the money to take care of a loan. Even those who need money in the long term have better cards with private investors. "Banks have gotten increasingly restrictive with long-term loans due to increasing administrative requirements," says Andreas Doerfert. A private obligation loan usually lasts between five and seven years, a loan from a bank only three to five years.
SMEs as a new objective gathering
Medium-sized companies looking for a private loan can contact funds like HF Private Debt. The financier, which is 49 percent owned by the private value company Hannover Finanz, has been offering loans specifically for
medium-sized companies since this year. While many other private obligation companies mainly have loans from 25 million euros in their portfolio, which are not an option for many, medium-sized companies because of the high amount, HF provides loans of between 5 million and 25 million euros. "There is a demand for these smaller
loans," says Doerfert. "That is the reason we chose to close this hole in the market."
So far the fund has paid out four loans, more are being planned. HF Private Debt has gotten capital commitments of € 110 million from private investors, which the fund can give to medium-sized companies as a loan. According to Doerfert, there is no shortage of demand. The fund has now gotten over a hundred inquiries.
Be that as it may, private obligation loans are not granted unconditionally and without a credit check. HF demands from the borrowers in any event 20 million euros in sales and an Ebitda, for example a benefit before taxes, depreciation and interest, of in any event 2 million euros. "We don't finance losses or prevent bankruptcy," emphasizes Doerfert, "that is excessively risky for us and our investors."
With many private loans, medium-sized companies need to experience due diligence beforehand. This is an examination of the business model by external auditors. In their final report, the auditors state how high they estimate the default risk of the potential loan. "Medium-sized companies should not underestimate this exertion," says Schmitt of the investment bank GCA Altium. "The auditors are on-site for a few weeks, take a close take a gander at everything and also ask management questions."
It is not yet possible to say whether the default risk for private obligation is really higher than for bank loans.
So far, barely any loans have terminated. It is also unknown how the funds and private investors carry on in an neconomic crisis. In recent years, the economy in Germany has only gone up. It is in this manner unclear what will happen when the next crisis comes. "When things are going gravely, banks don't reassess as fast and stick to their customers," says Schmittat. "The future will show whether this is the case with private obligation funds." https://airporttransfers.london/london-heathrow-airport-transfers/