Un participatory loan It is a type of funding that is granted through public entities that seek to promote entrepreneurial activity. Enisa, the National Innovation Company, is an example of an entity that offers financing in the form of a participatory loan. Some of the participatory investment or crowdfunding platforms also use this type of funding.
The requirements for accessing participatory lending are less restrictive than those of a traditional bank loan. In addition, they promote the creation of viable business projects with expectations of growth and consolidation.
The lending company provides a long-term amount of money in exchange for the payment of interest and commissions, the expenses will be deductible for tax purposes.
Main characteristics of participatory lending.
Participatory loans have 5 general characteristics that make them different from others:
- The participatory loan has a flexible interest. Generally divided into two interest rates: the first is interest linked to the evolution of the company. This is a variable interest rate that changes depending on the company's turnover and profits, and this interest rate is regularly stipulated with minimum and maximum rates. And the second interest rate is fixed and is agreed upon at the time the contract is formalized.
- Participatory loans are considered the company's net worth.
- They do not require guarantees other than that provided by the business plan. Therefore, if the company does not perform well and is forced to close, the amount of the loan will not fall on the entrepreneurs, but the debt can only be claimed from the company.
- Participatory loans require an increase in the company's capital with the same amount that is amortized. That is why it is said to be a co-investment mechanism. - They have grace periods (during this stage the installments only include the payment of interest) and amortization (in which the entire loan must be repaid), longer than those offered by traditional bank loans.
To grant one of these loans, the viability of the company and the business model will first be studied, to find out if it is safe to invest in the company or not.
The advice of a consultant specialized in the preparation of reports and requests is recommended to ensure a larger amount of aid and its granting.
Do you have any more questions? From Intelectium, we have 15 years of experience in the sector and can help you assess the fit of your project. Contact us through the web forms for more information.
