Down payment
What is this type of financing?
The down payment is the first source of financing for a business, and represents the money injected by entrepreneurs into their project. Entrepreneurs often inject their personal assets or take out a personal loan as their first injection of funds, when starting up or acquiring a business. Having an amount of money to invest in a project helps to lend credibility to your commitment. If the entrepreneur is prepared to invest his or her own savings, it's usually because he or she wants to succeed and is prepared to commit to the risks of the business project.
What are the special features of this financing?
- The down payment can take various forms, such as shares (common or preferred) or advances.
- If the project involves financial institutions, the borrower will certainly have to agree not to repay his initial capital outlay (extension/subrogation), unless this repayment complies with predetermined conditions (e.g. repayment based on financial performance).
- When buying a business, the amount of the downpayment is important, as it will affect the borrower's finances for years to come.
- As a general rule, the down payment should cover between 20 % and 30 % of the company's purchase price or project cost.
What are the advantages of this type of financing?
- The downpayment reassures lenders because it allows them to share the financial risk with the borrower.
In addition to answering your questions, our SADC experts can help you make a real analysis of your situation. What's more, an analysis of your long-term needs and the determination of an appropriate financial strategy for your business could be developed at the same time.
See the list of different needs to the right that this financial product can meet. Don't hesitate to apply for financing from SADC. We'll be happy to support you as you think about your project and bring it to fruition.
YOU WISH...
- Acquiring, merging or taking over a company
- Improve your working capital / Growth
- Starting a business
- Developing a residential / commercial project
- Acquiring equipment
- Export your products or services
- Financing your tax credits
- Buying commercial/industrial property
- Turn around your financial situation
- Take equity out of your business
- Robotize / Automate / Improve IT
- Financing a startup
- Improving environmental performance
- Carrying out a group project
- Strategic planning for your company's development
