How minibond issuing can save your company from bankruptcy?
Are banks not support you in implementing your business projects, are they revoking your loans and you no longer know how to find liquidity for your company?
With this article we show you a solid solution to these problems: we are going to explain how to finance your business and be more visible on the financial market with the issuing of minibonds.
In this critical financial situation alternative methods to finance your business are needed, as you are obliged to rethink how to access credit and thus diversify your sources of financing. You know very well that today, compared with the past, banks are no longer so willing to finance businesses, they have changed and they do not guarantee quick and easy liquidity.
It is now widely acknowledged that if you want to grow, be visible on the money market and make your enterprise work, you can no longer rely only on banks because they have reduced the supply of credit and increased the interest rate (especially for SMEs considered more ‘risky’ by the EU).
Here is an alternative solution : minibonds.
You have probably already heard about debentures, bonds and minibonds. However, often technical terms are used, that, for those who are not into this subject, sound complex. So let’s take one step at a time and see, in a simple and clear way, what they are and how they are used.
To understand what minibonds are, we must first comprehend what obligations are.
Bonds are debt instruments issued by companies or public bodies which, at maturity, give the holder the right to be reimbursed the capital lent to the issuer, together with interest on the sum.
Let’s try to simplify the concept through an example.
Suppose a friend or acquaintance asks you to borrow money. Since he is someone close to you, let’s also suppose that you are willing to lend him this amount and that together you set a defined period of time for the refunding, with the addition of an interest rate. This is a bond.
You then establish a more advantageous agreement than a loan that a bank could give because there is a relationship of mutual trust. The confidence and esteem you have towards a friend reassures you that, at a future date, he will return the money you lent him because you know him and you perceive that he will be able to return it to you.
It is specifically on the word trust that the entire credit market relies on between lenders and borrowers. All this is contained in a contract between the parties in which one of them undertakes to lend money and the other to return it in a predetermined time by paying periodic interest.
To learn more about bonds click here.
Now we are ready to address the central theme of this article: the issuing of minibonds.
What are they?
They are medium-long term bonds (or obligations) (not less than 36 months) issued by Italian companies for projects development or specific investments to increase the liquidity needed to grow the company. They therefore represent an important non-bank financing opportunity for those firms that need money to invest in buying, for example, production plants or real estate and decide to do without bank credit using this alternative debt instrument.
If your company is not listed on the stock exchange, these bonds allow you to expand and access the capital market, thereby greatly reducing your dependence on bank credit.
Being a little known topic in the SME world, this question may arise: ‘Won’t it be a too complicated system?
In reality it is simpler than you think because thanks to the legislation that came into force in 2012 and the subsequent additions and changes made in 2014 with the ‘Piano Destinazione Italia’ and the ‘Decreto Competitività’ the issuing of minibonds is easier, less complex and not too expensive.
Who can issue minibonds?
Minibonds can only be released by S.p.A (Joint Stock Company), S.r.l (Limited Liability Company), Cooperative Societies and insurance companies.
The ‘Destination Italy Decree’, cited above, establishes only the following restrictions : the issuers must be Italian companies not listed on the Stock Exchange with a turnover of more than 2 million euros and a workforce of at least 10 employees.
Is minibond issuing a really valid solution?
At this point it is important to understand if minibond emissions are the key to financing your company.
A reliable overview is transmitted to us by the Politecnico di Milano in its Observatory on minibond emissions.
The latest statistical disclosure, published in 2019, highlights that in 2018 the minibond emissions industry has had a constant and continuous development.
498 Italian companies made use of minibond emissions at the end of 2018 and, very interestingly, 260 are SMEs. The observatory, among other things, still has 176 clients from 2018 and had a doubling in the number of the Srl on the 2017 figure.
This survey shows the willingness of companies to boost internal growth, to restructure financial liabilities, to grow by external lines, and to enlarge working capital.
The observatory also includes in its archives 746 minibond issues from 2012 to date, of which 636 of less than €50 million. The total nominal value is 25.2 billion euros. In 2018 there have been 198 minibond issues (increased compared to 2017)for a total of €4.3 billion.
Who can subscribe minibond issuing?
Generally there are institutional investors and qualified entities such as banks, investment companies, asset management companies, amortised management companies and financial intermediaries registered in the appropriate list.
Therefore, the issue of a minibond is carried out through banks or specialized consultants, the so-called advisors.
Are these the only professionals needed?
This is what one might believe but, the seriousness of the matter requires that we treat it as very delicate kind of choice.
If you decide to go to a bank, a loan will simply be transformed into a bond, without any particular attention and without giving you visibility on the market, thus making the whole operation unprofitable.
The advisor, on the other hand, is an expert ordained to assist the company in the following activities: initial strategic decision, analysis of the business plan, information and definition of the timing and modalities of the issuing.
To attract investors, you need an advisor who is able to make you visible on the market, to make you stand out from other competitors.
Remember: the more visibility you have, the lower the costs will be for you; the more attractive and interesting your project will be, the more you will stand out from others.
Let’s take Italian government bonds for example, they are certainly visible because everyone talks about them but they are not attractive because they bind your capital making your interests unprofitable.
Perhaps you are asking yourself where you can find a professional figure able to suggest a method that can make you visible and attractive in the market and that take you through the whole procedure step by step.
The exact answer to such question is a method, specifically the KREDWAY METHOD.
What is the Kredway method?
The fastest and safest way to access extra bank credit.
It has been developed by C&G Capital to provide companies, who want to access non-bank credit, with a tailor-made strategy that leads to the intended result.
What does the METHOD involve?
It has a preliminary phase designed to understand which is the most suitable solution for you and that will guide us in the initial strategic decision. We are going to support through one of our tutors, who will follow you all the way to the issuing, thereby allowing you to live a unique experience.
The next activity involves an in-depth analysis highlighting the strengths and weaknesses of your company and your business projects.
We do not limit ourselves to this, because our aim is to make you reach your goal and stand by you even once you have achieved it.
The obtained assets will require a clear-cut kind of management, which is extremely important. We have the right experience to follow you through.
With us your company’s development and growth will be continuous and profitable!
Why are we so sure?
Because we will provide your company with more and more visibility in the financial market which, as already stated, a bank is not capable of doing, as its issuing of minibonds benefits mostly the institution itself.
Summarizing, minibonds can be considered the best valid alternative financing tool.
Now, thanks to us you can get to use monetary avenue!
Book an appointment with one of our Kredit Finder, you will get the best solution matching your needs and you will be able to leverage the market accordingly.