Who grants a loan to entrepreneurs?

The successful start of a company rarely fails because of the good business idea, but more often because of the financing of the same. Most of the time, a loan is needed for company founders. There are a number of financing models for this.

Microcredit

Microcredit

Microcredit is a good choice for a business start-up loan. Microcredit is an instrument created by the European Social Fund in cooperation with the Federal Ministry of Labor and Social Affairs and the Federal Ministry of Economics and Technology to enable young entrepreneurs to get a loan for entrepreneurs. This loan is available for company founders through local partner companies of the German Institute. Here, a company founder receives a loan of up to USD 20,000 with a term of up to 3 years.

The interest rate on this loan for business founders is around 7.5%. The advantages of a microcredit are that a Credit Bureau entry is not always an exclusion criterion, that the loan amount can be paid off in installments as well as finally paid and that non-bank collateral can also lead to a loan approval. There is also a liability fund for microfinance, the Good Finance Germany. This fund assumes the entire liability risk for the financial institution granting the loan and is managed exclusively by Good Bank.

Credit from private

Credit from private

This is a very young form of lending, in which online loans for entrepreneurs are financed by private investors. The best-known credit portals are Best Lender and Good Lender, where a loan for business founders can be obtained from an effective annual interest rate depending on the provider and loan amount from 2.01%. This form of credit is suitable for company founders who only need a smaller amount to finance their business idea.

Nevertheless, these credit portals have some advantages that should not be underestimated, because private investors often incorporate social aspects into their decisions when lending and so it is often possible for borrowers with a low credit rating or a negative characteristic at Credit Bureau to have one to get credit.

Business angels

Business angels

A good alternative to a conventional loan for company founders is a so-called business angel. This “company angel” is a person who participates financially in starting a company as well as assisting the company founder with their professional know-how and diverse contacts.

These are mostly well-heeled managers who are not afraid of the risk of participating in a young company and often steer this company very target-oriented into a safe haven due to their extensive experience, which creates a win-win situation for everyone involved.

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