Traditionally, commercial banking has been in charge of granting financing and credit to all those companies and individuals who need it. However, at present the financial landscape has changed radically, emerging new financial alternatives, so you can not talk only about bank financing.
In this way, we can say that banking has been losing strength in terms of private financing. Now this financing can also be granted through different entities and platforms thanks to which new alternative financing modes such as crowdlending have emerged, already talking about financing and credit companies.
What are the objectives of this type of financing and credit companies?
The ultimate goal of a financing and credit company is to grant financing for both companies and private financing for entrepreneurs.
Each of them has a series of its own characteristics and uses different methods when offering financing. Some of these financing and credit companies are the following:
Types of financing and credit companies
Commercial banking is the most known and conventional financing and credit company. Its way of working is based on the analysis of the characteristics of the applicant (or of the project that, as an entrepreneur you want to implement), based on what the operation will be approved or denied. If so, the conditions that, on both sides, are deemed appropriate, such as the interest rate, term, additional products, etc., will be established to subsequently grant the private financing that the applicant seeks to obtain.
A few years ago, there were hardly any competitors, so customers had no opportunity to choose other different financing and credit companies, a fact that has changed with the emergence of different financial alternatives such as crowdlending.
Venture Capital Companies
This type of financing and credit companies, also known by many as venture capital, are companies based on the investment of funds in companies with growth expectations to subsequently recover their funds with the corresponding interests. It is for this reason that a large percentage of startups seek financial support in this type of financing and credit companies.
The great inconvenience that they can present is that the companies that request it must have a clear forecast of growth so that they can receive the financing, since generally, these companies seek to take part in new companies belonging to dynamic sectors that, thanks to the shareholding part that have acquired with the financing, provide a high profitability.