Among the different loans for existing entrepreneurs, it is the participative loans that generate the most interest. At Lite Lender Company we want to explain why this happens so that people know the reasons behind it. There is always a reason for everything, and if this financing is ideal for those starting a business, it has to be for a reason.
Something that by the way we have already discussed at Lite Lender Company when we talk about Spin Lender financing. Because the credits of this public entity are the first to be considered in this way. In fact, in our company when a client asks us to recommend one of these business loans, we always name Spin Lender.
What type of credits are these, what are their advantages?
Okay, let’s see all of this. After reading it, you will surely understand why entrepreneurs want this financing. Even above bank financing being cheap loans too.
What are participatory loans, because they are called that?
The name that is given to this financing basically what it does is to reflect the main characteristic of the credit. Because it really is not a 100% credit because in part it can be said that it is similar to social capital. What we have to understand is that the financial company here participates in the evolution and progress of the business.
For this reason, participatory loans are said to have some of the capital stock. Part of this financing is seen as if it were share capital as it is a loan that depends on the progress of the business. Exactly the same as happens with investors or partners of a company.
Depending on the evolution of a business, they may or may not obtain profitability for your company. Well, here it is the same way.
We can also affirm that these are loans where the interest rate imposed by the financial company depends on the profitability of the business. They are therefore flexible loans. We will understand all this better in the next point.
Characteristics of participative credits
This is undoubtedly the most important point and why you will understand the reason for our opinion.
- The main advantage of this financing is that clients here do not have to provide guarantees. They are therefore loans for entrepreneurs and companies without collateral. And of course, taking into account the shortage of these credits in the market, it is obvious why they are important.
- The interest rate applied by the financial company is flexible. It usually applies two interest rates, on the one hand a fixed interest rate (the small part being) and on the other the variable rate. The variable interest rate depends on the profitability of the business. If it is a profitable business the interest rate will be higher, and the same in reverse. This explains why it is the type of credit that all entrepreneurs seek. Because the return of the credit is made adapting 100% to the situation of the company.
- It is one of the slowest loans on the market and may take months to process. If you are looking for a quick loan this is not among the recommended options.
- In the same way we have to consider them as cheap loans since they have a cost similar to that of the bank. It is together with the loans that we see by bank the cheapest financing for companies and entrepreneurs.
5.The amounts we can get can be small, medium and large. It is undoubtedly one of the advantages considering that they are personal loans.
Why aren’t business loans easy to get?
They are not because with the number of options to lend few are the investors who agree to sign them. In practice, what ends up happening is that the lenders in the end leave them as the last alternative.
Many do not even value it when it comes to signing a loan. With this, what I want to tell you is that when it comes to signing one of these business loans, few options are available. It is possible that a financial company in addition to Spin Lender offers you this possibility but it is not the usual thing. There are some that make loans for companies and businesses but almost never from the point of view of participation in the business.
Another thing is that you talk about options like that of the capitalist partners or venture capital being a different financing. Despite all this, at Lite Lender Company we have no doubt that we will continue to recommend this financing over others.