INBETS SME FINANCING ...

Through this model, co-financing is provided by the transferor him-/herself in order to make the transfer solution possible. Concerning requirements, no hard and fast rules exists. The length of the contract and the executive's role with the company post-acquisition are two issues that also have to be negotiated. If this form of financing is accompanied by a loan, the latter will be given priority.

EU-wide application:
Type (size) of SME business transfer: Financially smaller takeovers, and more likely in the case of family succession.

Co-financing is provided by the family and/or friends of the successor/buyer. In terms of requirements, the length of the contract (the agreement) should be fixed in writing to avoid any conflicts between the partners due to different expectations etc. It is also important to remember that you should not mix money and friendship!

EU-wide application:
Type (size) of SME business transfer: Financially smaller takeovers.

An amount of money is borrowed and has to be paid back, usually together with an extra amount of money that the borrower has to pay as a charge for borrowing. Unsecured lendings generally attract higher interest rates. The prospective lenders are expected to run a thorough credit assessment, taking into account all information available from the company etc. to justify the increased risk undertaken. In choosing this model of financing, one should remember that loans in general take time to arrange.

EU-wide application:
Type (size) of SME business transfer: Different types of business transfers (i.e. internal and external ones).

An amount of money is borrowed and has to be paid back, usually together with an extra amount of money that the borrower has to pay as a charge for borrowing. Loans secured against assets are likely to attract lower interest rates.

Requirements
The prospective lenders usually run a credit assessment, taking into account all information available from the company etc. The analysis of the management capabilities is a critical factor (a clear vision needs to be demonstrated based on a credible business plan).

Things to remember
Most banks and non-banks prefer to lend to established businesses with a stable and positive cash flow history, particularly if they can provide collateral or a personal guarantee.

EU-wide application:
Type (size) of SME business transfer: Different types of business transfers (i.e. internal and external ones).

Financing is provided by individual employees or a group of employees (group of executives/managers). The length of the contract (the agreement) should be fixed in writing to avoid any conflicts between the partners due to different expectations etc. Furthermore, one should remember that this creates increased pressure on the company (its organization members) to earn money to repay the individuals' own funds.

EU-wide application:
Type (size) of SME business transfer: Financially smaller business transfers.

Partial funding is provided by the state or a (stately-run) business support organization aimed at supporting companies in different stages of development.

Requirements
Financing will depend on a number of different factors (e.g. vision behind the takeover, manager capacities, decent business plan etc.). Programmes and requirements vary from country to country. The number of options available depends on the country's in question attitude towards business support.

Things to remember
Takes time to arrange, in-depth understanding and overview of the different programmes available is needed to identify the best one for the business transfer solution in question.

EU-wide application: (the existence of public funding/business support organizations focusing on SME business transfers assumed)
Type (size) of SME business transfer: Different types of business transfers (i.e. internal and external ones).