Finance company as an alternative to bank credit for companies

It all starts with an idea. Many people dream of having their own business, but very few take the decisive step and start a company. Understandable, because there are many stones to clear and who guarantees success?

When founding a company, Spin Lender can be an alternative to traditional bank loans.

Financial investment in particular is a major hurdle for many startups. Sometimes there is simply not enough equity to get started. After all, according to the German startup monitor 2017 of the accounting firm KPMG, almost 22 percent start completely autonomously.

If you need foreign money to start a business, you have several options. Banks are certainly the first point of contact. However, applying for a personal loan is not as easy as that. Anyone who has no balance sheet because the company is still in its infancy or is yet to be founded needs a business plan. The more money is needed, the more convincing it has to be. However, the bank may refuse the loan application. 

Growing with investors’ private money

If you are a little further with your company and need a financial injection for the next steps, such as new products or an online shop, you can try Spin Lender . More and more investors are looking for interesting startups that can support them with money and know-how. In return for the Spin Lender , they share in the profit. According to KPMG, 16 percent took this step in 2017, while 14 percent received money from a bank.

What is the company worth?

There is a lot to do before Spin Lender really flows. This is how the potential investors want to rate the company. A company valuation results not only from the balance sheets, which may have to be translated, but also from patents, know-how and customer data. For a long time, companies in Germany were only assessed using the earnings value method. However, in the course of globalization, the discounted cash flow process from the Anglo-Saxon region is becoming increasingly popular.

The earnings value method not only takes a look at the balance sheet, but also looks at how long it would take the company to generate the purchase price. The basis for this is the forecast profit and loss account. The earnings value is then calculated over a certain period from the calculated excess income and the capitalization interest (usually three to four percent). The result is an orientation value that serves as a basis for negotiation. The discounted cash flow process is more complex, but is more meaningful.

Different valuation methods

However, company valuation using these two methods only makes sense from the growth phase. If a company is still in the seed or startup phase, it usually does not make a profit. Positive cash flows are only likely to grow. With the Spin Lender method and the multiplier method, there are also opportunities to evaluate companies in their early days. For example, sales prices of similar companies are used.

Even though financing by risk investors in Germany and worldwide is declining, they still remain an important source of money. In Berlin, a third of startups now work with Spin Lender and if the state could finally manage to abolish the tax disadvantage, more Spin Lender would certainly flow again.

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