For which type of investment is financing via DL suitable?
Investment plans? Need money for company equipment? Renovation plans? Need extra working capital for purchasing and further growth? Need for power enhancement? Or acquisition plans? Direct Lending is suitable for all these investments. Many DL providers have a specialization. One focuses more on growth and working capital, the other on tangible fixed assets. For example, there is a platform that specializes in amounts up to $ 300,000 with a maximum duration of 24 months. Another provides correct amounts from $ 250,000 on a long-term and subordinated basis, so that you can strengthen the capital position of the company. Another specialist lender makes financing available for temporary bridging for the redevelopment of real estate. In short: DL can be used for every credit requirement. Most lenders have their own specialization: so the nature of the financing requirement partly determines which provider fits you.
What amounts can you borrow via DL?
Every lender has its own reach. Where one provides loans up to $ 250,000, another starts from $ 1 million. In other words: DL also applies widely to the amount of amounts. 95% of the supply is in the range of a few tens of thousands of euros to around $ 10 million.
How does DL work: how do you apply for funding and how does assessment and settlement subsequently take place?
All providers can be reached via the internet. DL lenders invite the borrower to complete an online questionnaire and supplement it with uploading specific documents. The lender indicates the follow-up procedure on its website. For financing amounts below $ 500,000, the full assessment is usually based on the information provided online and the applicant has a definitive answer within 1 or 2 days. With larger loans, the process can be more individual and personal. Then the entrepreneur has the opportunity to explain his plans in a personal interview. The processing time for the financing application then requires extra time. The assessment and the financing arrangement are more tailor-made in this situation.
The conclusion of this blog can be found in the title:
Direct Lending is a broad concept that includes many lenders.
It is useful for many financing issues. Applicable for small and large amounts. For the “smaller” amounts, the application and approval process is (largely) standardized and automated, which means that the application procedure takes a few days at most. With larger loans, a more individual process is possible. In short: DL is a concept that cannot be categorized under one name.
In the upcoming blogs we will discuss the features, advantages and disadvantages of DL in more detail. Interested in SMF blogs? Then register here.
KBM Financing Foundation
Direct Lending has been set up by providers on the internet in such a way that an entrepreneur can take care of the financing application himself. In such a situation there appears to be no role for a financing adviser. But that is very much the question: after all, a consultant is (better) able to judge which provider fits best in a certain situation. SMF is organizing a conference on that role of the consultant on 29 October 2019:
“The profession of finance advisor within the turbulent finance market”. This congress focuses specifically on advisors who are active in the field of corporate finance. Do you want to be sure of a place? Register here now.