The business cash loan is a credit in its own right and is one of the various solutions that the entrepreneur can use such as debt mobilization, factoring, commercial paper or even bank overdraft.
Here is a complete inventory of the various financing formulas available to entrepreneurs.
The mobilization of receivables
Debt mobilization is a transaction that allows the company to obtain in advance the payment of a debt that should have been payable in the future.
The principle of discounting is simple: the bank advances the proceeds of its claims represented by commercial paper in exchange for remuneration (the agios) which include both the interest on the advance and the bank commission.
Charge to the bank, become cambiary creditor to cash the draft with his client. The line of financing granted represents the maximum of expected effects. This is a point that must obviously be discussed with his bank.
The Dailly assignment
It is a form of cash loan, the principle of which is based on the guarantee provided by a certain number of claims, generally justified by invoices. The operation is a bit similar to the discount. The bank records these receivables in a slip (Dailly slip) and sends the debtor customer a notification to pay. From that moment, it can only settle at the bank.
The Dailly mobilization is governed by the Monetary and Financial Code and represents a simplified form of debt mobilization. It allows the company to raise receivables that are not materialized by bills of exchange that become after acceptance, opposable to third parties such as drafts discounted.
Factoring or outsourcing of receivables
The factoring principle is based firstly on financing granted by a credit institution known as the Factor and secondly on the coverage of any outstanding payments.
This principle is part of the outsourcing of accounts receivable management , the factor then taking charge of receivables.
Unlike discounting, factoring is based on the principle of a debt repurchase by the credit institution against remuneration. The company thus transfers the risk of unpaid invoices to the factor.
The cash facility and the bank overdraft
The cash facility allows you to benefit from a debit authorization from your bank. It has two disadvantages:
- First, this one-off credit is expensive
- Then the bank can terminate it at any time, which may put you in the situation of an unauthorized discovery.
On the other hand, the overdraft authorization is a real negotiable contract either when the bank account is opened or later. It brings greater security than the cashier facility.
This authorization “contracted” with the bank is akin to a real professional credit without contribution. It is therefore necessary to check whether a short-term loan is not more advantageous.
Credit by signature
It may happen in certain situations that the bank agrees to commit through a signature credit . In this case, it does not make any cash advance, but by guaranteeing the company, it allows it to defer the payment of the debt thus to benefit indirectly from a credit.
The bank will therefore commit to suppliers to pay instead of the company in case of default on its part.
These payment instruments make it possible to transfer certain receivables on the money market which then become negotiable over periods of up to one year. Thus, other companies interested in these claims can they grant the necessary cash credit without going through the banking circuit. Given the complexity of the system and the minimum amounts of securities, the Notes are not suitable for small structures.
OSEO is a public institution that helps local entrepreneurs in 3 ways
- By guaranteeing loans from banks and certain equity investors
- By lending in partnerships with banks
- By sharing the risk with them.
Advance + service provides a cash loan to meet future deadlines. However, this service is limited to receivables coming either from Public Establishments or credit claims approved by OSEO.
The local authorities initiative
It is important to highlight the initiative of some local authorities who have decided to face the serious economic and financial crisis and the numerous bankruptcies that follow.
Thus, to save many jobs, the Hautes-Alpes department offers cash loans to help companies with more than 3 years of seniority and who are in difficulty. Two prerequisites are however required:
- Do not be in receivership at the time of the application
- Having been denied credit at his bank.
This loan may be spread over a period of up to 7 years with a grace period of 2 years. The amount of the advance is up to € 100,000 for a company with 15 employees or more.
Note that a joint guarantee is required beyond 5000 €.