We're excited to be hosting an interactive session at FTT20Virtual next week.

Join over 5,000 online attendees + networking and content sessions by 50+ industry speakers.

https://www.linkedin.com/events/weownatfintechtalentsvirtualspring/

https://www.linkedin.com/company/ownmarket/

Cash is critical to business growth, and companies need clear access to finance to support their development. Yet cash flow remains the number one reason small businesses fail, and only 4 in 10 SMEs apply for external funding – why?

One major challenge is the number of finance options available to start-up and scale-up businesses. Company leaders don’t want to ‘back the wrong horse’ and get trapped in an inappropriate financial agreement, when there are more flexible funding opportunities available.

To help SMEs choose the most appropriate funding route, WeOwn looks at two popular options available through our business finance platform: peer-to-peer loans and private capital raises.

Debt financing: why do SMEs take out a business loan?

There are three main reasons that SMEs find business loans a more attractive prospect than private capital raises. These are:

Retaining equity – lenders make money on the interest payments from loan agreements, so there’s no need to give away business capital in order to secure finance.

Quick cash boost – the online loan application process is very quick, providing rapid access to finance. The amount borrowed can also be repaid relatively quickly, making business loans a good short-term funding option.

Low borrowing threshold – because of the straightforward process and short-term agreement, it’s often cheaper to borrow small amounts of money than run an investment round. Businesses loans on the WeOwn platform start at €20,000.

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https://weown.com/business-loan-or-private-capital-raise-which-is-the-best-finance-option-for-smes/

WeOwn's new lending platform is launching at a time when the need for quick, affordable business finance is reaching critical mass.

Companies can register for free now: https://fast.weown.com/own/platform

The true cost of poor business admin
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Compliance is a boring but necessary part of financial services and, for both public and private companies, maintaining a share register is part of that administration.

But managed the right way, stakeholder registers can deliver far more than meeting legal requirements; they can help you to build more profitable investor relationships.

The legalities of managing investor data
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In most countries, financial organisations are required by law to keep a record of shareholder data, so you know who owns your company at any given point in time. A database also makes it easier to contact investors in the event of an Annual Grant Meeting (AGM) or company vote, or arranging dividend payments.

Many companies create a list or register to manage this information, which needs to include investors’ names and addresses, the amount paid on their shares, how many shares they hold and what class, and the date that they became an investor. In some countries there are additional requirements; the length of ownership is a particularly important detail to record in France, Italy and Spain for instance, as loyal investors receive additional rights.

For publicly owned companies there is a further requirement, as it must be declared on record if anyone with voting rights acquires an interest in your shares. To manage these administrative requirements, most public companies turn to a registrar or Central Securities Deposit (CDS) to outsource the job, but this often results in high fees and slow updates, as many such custodians are using legacy technology.

On the other hand, private companies tend to manage investor data in-house via an excel spreadsheet or word document, but this makes it difficult to ensure there is a single accurate copy of the list at all times, and that everybody is updating the same document. Sometimes these spreadsheets aren’t password protected either, leaving them vulnerable to unauthorised changes.

Getting legally-required information into a central list might be the end of the exercise for many businesses, but with this approach you are missing the opportunity to nurture the value of your investor base. By migrating to an online share register, however, you can do so much more with the data you are collecting.

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https://weown.com/how-well-are-you-managing-investor-data/

After improving the way that growing businesses can raise equity, WeOwn is now expanding our alternative business finance marketplace by launch a new peer-to-peer loans service.

WeOwn business users will now have the choice between whether they want to carry out an equity fundraise to generate capital or borrow money from suitable lenders.

Our new peer-to-peer loans service is completely digital, and has been designed to make accessing finance simpler, quicker and more cost-effective for SMEs – many of whom struggle to get funding from mainstream bank loans.

A better financing opportunity for businesses

Bank loans are supposed to help businesses grow, but the story is very different for SMEs in comparison to major enterprises. European Central Bank data has shown that while 45% of larger firms have applied for a bank loan, only 27% of smaller businesses have followed suit – and many of them face rejection.

Relatively high risk-levels and low borrowing amounts mean mainstream banks don't tend to see the value in lending to SMEs, as their cost structure and processes make small loans less profitable to them. Yet, 80% of European SMEs are "micro" businesses with less than 20 employees, seeking loans of €100,000 or less.

In contrast, many professional investors understand that lending to businesses at their highest stage of growth is very lucrative; the alternative lending market in Europe will surpass the €5 billion mark in 2020, and top €6.7 billion by 2024. That's why WeOwn has built a peer-to-peer loan marketplace: to bring dynamic businesses and ambitious lenders together.

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https://weown.com/peer-to-peer-darlehen-marktplatz/