How to choose the right financing for an investment ?

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You can mobilise different types of financing, for all or part of your financing needs.

Self-financing

In this case, your SME mobilises the funds it has at its disposal: own funds, cash surplus, etc. This solution reduces your SME's debt. Your banker thus perceives your direct contribution to the project. However, self-financing has a limit: once consumed for an investment, these funds must be reconstituted so as not to put your balance sheet out of balance.

Leasing

This can be either movable or immovable, depending on whether you wish to finance equipment (machine, vehicle, computer) or a factory, shop or warehouse. It can also be a long-term lease. The principle is simple: you are not the owner of the asset, it is the bank that acquires it and makes it available to you in return for the payment of monthly instalments or rent, if you opt for long-term rental. Thus the investment does not weigh on your SME's balance sheet, it is not entered as an asset and there is no credit on the liabilities side, nor is there any depreciation to enter in your accounts. This can therefore represent an option for your SME to simplify the management of certain investments.

Loans 

These are medium- or long-term (generally 2 to 7 years for equipment, or 8 to 15 years for real estate). They are used to finance all or part of your investment project, in addition to any self-financing you may have. Please note: your investment loan must be shown as a liability on your balance sheet and the asset you have acquired as an asset in your company's accounts, and also in the "depreciation" section of your accounts.Other types of financing

You can also mobilise other types of financing, rather in the capital of your company (seed capital, private equity, development capital, venture capital, etc.). In these different cases, your partner will have more of an investor role than a lender role, more clearly it will be present at the top of your SME's balance sheet, alongside the equity capital, with the objective of supporting your company over a more or less long term period.

Plan for possible guarantees

In support of financing by means of a medium or long-term loan or leasing solution, your financial partner will certainly ask you to provide a guarantee. This enables the loan to be repaid in the event of difficulties in paying your debt.

Your SME can provide the following as collateral

• A pledge or collateral, for example your SME's business, your stock, production equipment or even shares in your company if it is a company;
• A personal guarantee;
• A bank guarantee provided by BPIFrance or a mutual guarantee company (this may be specific to your sector of activity).