Financing your business, Advice from a banker Part.II

- What (s) benefit (s) to go through a bank rather than a business angel or venture capital? What are the main differences?
We must differentiate
- Venture capitalists, who are willing to take a significant risk, financially equivalent to the creator and without warranty, in exchange for a higher expected return, usually at a horizon of 5 years.
Their involvement provides funding needs difficult to finance by banks (research and development, for example), but reduces the profitability of the creator who shares the capital gain by his activity.

- The bank lenders, who accept lower profitability (margin on credit) in return for lower risk that reduced by guarantees.
The use of bank lenders allows you to play the leverage and improve the profitability of capital (return on capital exceeds cost of credit), but a start-up and very innovative can only marginally be financed with banks will have recourse to capital investors.


- How is evaluating a project started by a bank? What is the importance of training courses or the contractor in this assessment? Loan Entrepreneurship

ultimately, the decision to finance a business is about trust: the banker said: "I have confidence in the ability of that person to go through with his plan, I feel good." For the creator, inspiring trust is to first show his professionalism, he knows the area where it will start, he thought his project and was given the resources, including human and financial, to succeed, etc...

Financing your business, Advice from a banker Part.I

Jacques Dumartin, professional customer adviser in a large national bank has agreed to answer questions to explain the solutions offered by banks to support the launch of companies and provides advice to maximize his chances.


The creation of a company share a first idea, a desire of the designer who will have to formalize its project to study the market, competition, quantify the necessary investment (including working capital needs development), building a business plan, evaluate its ability to financial support, to finally see a need for external financing. For these steps prior to the presentation of a banking record, the creator may be assisted by the ICC, accountants, support networks for entrepreneurship ...

Once the project led to the financial plan (financial plan, forecast, plan cash), still have to find bank financing.
These can take various forms: medium-long term credit for financing investments, short-term loans for the period Customer (B to B, factoring is a solution to be studied). The SLA can sometimes use to finance the needs intangible costs (not to mention the launching of working capital) and to facilitate the credit agreement ...

loan business creation Once the project is considered valid, have good chances of success, which is the essential first step, comes the question "what happens if things do not go as contractor and the bank provide? . That's where the issue of guarantees.
The first guarantees obvious, is the guarantees on property financed: pledge of goodwill, equipment ...

These properties undergoing a discount during a possible cessation of activity, additional safeguards are necessary for the bank can expect to recoup the capital lent: OSEO counter-example.
The deposit, at least in part, the entrepreneur is one of those additional guarantees and is a sign of motivation (50% maximum capital if counter-SAH).

Market forces Part.III

Also note that different strategies are possible. If the market is vibrant, there will be a scalper, who will try to buy and sell at 51 to 52 immediately, therefore, be presenting as much as possible on the bid / ask spreads. The scalp is an advocate of short-term, which provides liquidity to the market: this is very useful speculator. We also find longer-term investors, who hold a position and come forth once their target price achieved. Management of losing positions is also very important how each participant will he set his stop loss, that is to say, the maximum loss that agrees to bear. Each trader, according to his temperament, and its market position, establish its own strategy. Some will hold out long large positions, others will have their paper that burns your fingers and come out very soon as a small gain is recorded. The game is an excellent education, to understand how the market works, and learn to negotiate and manage its positions.
To make the game as realistic as possible, we give a number to each participant, so note in front of which is treated. In this way, we can make a real market clearing, and fire at the end the gain or loss each. Ultimate refinement, each point is worth 10 cents (or 1 Euro), and trade for real.
If you dine one evening toward the stock market, and there in the restaurant 10 excited in a circle, screaming: I pay for 10 or 52: I have 10 to 53, you now know what its acts: the Market!

Market forces Part.II

Now look what happens to the market opening, where one side to the top 49 to 51. Each participant takes its trading book, where he notes the quantities bought and sold, and courses. If two participants are large buyers, this means that for each market is 55, as they scored 10 of their paper and if it's reality, the market is actually 60. Unless there is immediately a big seller, who then entered a small figure, and is ready to bring down the market. If the seller is an observer, he can let up the market with buyers and sell them on what he considers to be the high point. Within seconds, the market can be very animated, change direction, experience significant estimated that each is of the opinion of others, etc. ... 10 people, 10 figures on pieces of paper, and it's like in Chicago, on the floor of the CME.
Put some rules to govern the listing. For example, processing a maximum of 10 contracts by negotiation set a maximum open position of 100 contracts, purchase or sale. It is also fun to publish a regular figure, as if that came out was 2:30 p.m. ET in the U.S. CPI or the trade balance. To do this, simply draw a paper hat and announce the number.

 Almost instantaneously, the market will adjust to the new value: If 10 was published, the market must rate 55; if it's 3, it is 47, according to the same principle. Once the information is public, it is immediately incorporated into lesson: it is the principle of market efficiency.

Market forces Part.I

For the uninitiated, the financial market often resembles a black box which we do not understand much, and especially what makes it go up or down. Hence the temptation erroneous to equate to a casino, which is statistically a negative sum game since the state, takes on each win. And yet it is simple to create a game market, where it likes to quote a fictitious contract for, while playing, better understanding how the market works, evaluate the strategies used, and feel the stress of holding a position.

I also used this game as educational courses in finance schools. In this context, the challenge is to create a market rather lively, with many transactions. The wise course students have a little more trouble letting go as traders in the evening, somewhat watered it is true.
How to play? Very simple! Take 10 people, each note on a paper a number between 0 and 10, without showing it to others. We put all the papers in a hat, we form a circle to recreate a floor trading, and we score the sum of 10 numbers. It sounds stupid, but I assure you playing for hours with it, in an atmosphere worthy of the notional floor in the heyday.
Some statistical explanations:  If everyone wrote a number between 0 and 10, the mathematical expectation of the sum is 50, an outside observer. But each participant in his own opinion on the market: if I wrote the number 10, the market is for me 55: my 10 plus the expected value of the remaining 9 digits or 45. I'm ready to buy up to 55. Conversely, for those who put 0, its estimated market value is 45, so he agreed to sell up to 45.