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The future of SMEs and startups in Corona times


This enables SMEs and startups to design their bridge financing independently of banks.

Who would have thought that the effects of the Coronavirus would drag on for so long? A lockdown in spring 2020 initially succeeded in containing the number of new infections over the summer and returning to normal operations for all companies and institutions. This turned around in the fall, and since November we are now in a partial lockdown, and further tightened measures are announced. Impact of the lockdowns on the economy Overall, as of November 2020, the federal government is forecasting a 5.5% decline in the gross domestic product (GDP) for 2020. This will affect the economy to varying degrees. Sectors such as tourism and gastronomy are currently particularly hard hit, but many SMEs or solo self-employed people are also reaching their financial limits, have had to use up their last reserves, or are facing the loss of their livelihood. Support for the economy To cushion the slump in the economy, the German government has launched various packages of measures to slow the further decline in economic activity, e.g. November aid for businesses affected by the November/December closures, bridging aid, economic stabilization funds, or KfW special loans. A total economic stimulus package of 130 billion euros was approved by the German government in the spring. To date, the funds have not been drawn down in full. The reason given by companies is that they are currently reluctant to make purchases and do not have the funds to access the subsidies. Can the economic stimulus package save all companies? The initial aid can be regarded as first aid and has certainly enabled many companies to survive for the time being. However, with the further lockdowns, it is becoming increasingly difficult for many SMEs and solo self-employed to maintain their operations. Equity is being used up to save jobs, cover running costs or procure new materials. For many SMEs or self-employed people, the aid is out of the question because the requirements (equity level, profitability, or less than three years of existence) are not met on their part and they, therefore, fall through the cracks for state-subsidized aid loans. Looking at the further effects, even companies that we’re able to successfully maneuver through the Corona crisis will face the next hurdle. At the latest when further capital is needed to finance investments or materials procurement, many companies will face a new challenge. As a result of the Basel reforms, companies seeking credit are bound by higher capital requirements imposed by banks. Many of these companies are unable to meet these requirements and thus cannot continue to implement their plans. Alternative financing mix for SMEs and startups The way for SMEs and startups to get out of this dilemma is to find an alternative financing mix. At this point, crowd investing can be a good way out of the financial bottleneck. How can crowd investing help? Crowdfunding is flexible for businesses and industries. Whether it’s for traditional retail around the corner, a craft business, or a real estate developer, you can all use the crowd to provide business, project, or bridge financing. With a network of investors and a willingness to promote one’s venture, crowd investing can be a quick alternative or complement to bank loans during the corona crisis. The advantage of crowd investing is that the crowd continues to invest despite the corona crisis. The investment sums of the investors are still high and many projects could already be supported successfully. Many crowd investing platforms drive especially since the start of the Corona crisis campaigns to create a sense of community and to attract investors. On the other hand, investors, in particular, are looking for profitable investment prospects in times of a low-interest phase that is now apparently lasting longer. What can we do for you? eProcessing offers with SMARTeFunding@OwnMission, based on SMARTeFunding@Software-as-a-Service (SaaS) software, the optimal process to raise the needed capital. Contact us for a free potential analysis!

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