The Entrepreneur Loan
at a Glance

Key facts at a glance:

• The entrepreneur loan belongs to debt capital financing and is primarily aimed at SMEs.

• Conditions and criteria vary between lenders.

• In addition to house banks and development institutions, lending platforms like Teylor are becoming increasingly popular.

• The entrepreneur loan from Teylor is well suited for short-term investment measures due to its speed.

• The application for an entrepreneur loan at Teylor is made via an online platform.

What Is an Entrepreneur Loan?

For important investments that cannot be financed through reserves, the entrepreneur loan offers a way to obtain the required capital. It is important to compare the different conditions offered by providers and find a suitable loan.

With this type of financing, the company obtains its required capital through an external lender. In addition to the traditional house bank and development institutions, lending platforms like the fintech Teylor are becoming increasingly popular.

Depending on the conditions of the medium-sized businesses, different credit models are suitable. In addition to traditional house bank loans, online platforms like Teylor, which focus on digital and fast application processes and are primarily active in the unsecured lending space, are recommended for investment measures.

Who Is an Entrepreneur Loan Aimed At?

As a special form of loan, the entrepreneur loan is aimed not only at self-employed individuals and business founders, but primarily at small and medium-sized enterprises with up to 250 employees and up to EUR 50 million in annual revenue.

The conditions for the required loan are derived from the loan amount, the individual needs of the applicant and the economic prerequisites.

Depending on the company's creditworthiness, financing partners may require corresponding collateral. The rule of thumb is: the worse the creditworthiness, the higher the collateral demanded. However, there are also providers that do not require tangible collateral for credit risk. For example, the online lending platform Teylor also has unsecured entrepreneur loans in its portfolio.

There are significant differences between the individual credit providers on the market regarding loan disbursement. Whether it is creditworthiness, revenue levels or the duration of business activity. Conditions such as the loan amount and interest rate also vary between lenders. Therefore, the various credit providers should be examined to determine which conditions best match one's own needs.

What Can an Entrepreneur Loan Be Used For?

An entrepreneur loan can be used individually for investments such as new machinery, or for ongoing working capital such as materials or salaries. The purchase of goods can also be financed through an entrepreneur loan for major projects. Through this type of pre-financing for large orders, companies can secure their liquidity for ongoing business and other important investments.

For pre-financing material purchases, entrepreneurs also have the finetrading procedure available. In this case, the finetrader pre-finances the goods and acts as an intermediary between supplier and buyer. However, higher costs such as assessment or processing fees may apply. Moreover, this financing model is exclusively intended for the purchase of goods and is therefore limited in terms of the use of funds.

Factoring is also a possible option to secure liquidity. Here, outstanding receivables such as invoices are sold to the factor. This secures the entrepreneur's liquidity, transfers the administrative burden of dunning, and, depending on the provider, transfers the default risk to the factoring company. However, this type of liquidity protection is also very limited and only applicable to the area of receivables management.

The advantage of the entrepreneur loan clearly lies in its versatile range of applications, offering the entrepreneur considerable flexibility. However, since the granting of entrepreneur loans is tied to the applicant's good economic situation, this form of financing generally cannot be used for restructuring or reorganisation projects.

Possible use cases for entrepreneur loans:

In addition to financing working capital and pre-financing large orders, the entrepreneur loan can also be used to compensate for seasonal fluctuations, build up inventory, and finance growth. Furthermore, investments in new technologies and digitalisation projects as well as the refinancing of other loans are popular applications for this form of financing.

Who Provides an Entrepreneur Loan?

Companies can apply for an entrepreneur loan at their traditional house bank, a development institution or a digital lending platform like Teylor.

Traditional providers of entrepreneur loans

At traditional banks, the processing of loan applications can take a very long time due to strict supervisory regulations as well as internal processes and structures. Especially when capital is needed quickly and flexibly, the house bank is not always the optimal route.

The Kreditanstalt fuer Wiederaufbau (KfW) also has the entrepreneur loan in its portfolio. Since it works with many regional development banks as financing partners, the KfW entrepreneur loan is applied for through the house bank and only granted when the house bank approves the loan application after thorough review. With subsidised loans, the house bank receives a liability exemption, meaning it does not have to bear the full risk in the event of a repayment default. The time factor also plays an important role, as loan processing for a subsidised loan also goes through the house bank. In addition to financing through subsidised funds and the traditional house bank, there is also the option of obtaining loans through a fintech like Teylor.

Finding the Right Entrepreneur Loan with Teylor

With traditional lenders, the time factor is particularly negative for short-term capital needs. However, for companies that need quick liquidity, the fintech Teylor offers a flexible solution. Teylor works closely with SMEs, has high industry expertise and, with the help of self-developed analytical technology, can very quickly gain a current overview of the customer's creditworthiness. In this way, Teylor arranges the loan that is best suited for the respective investment project.