Credit intermediaries have a major role for the economy, mainly because they help companies stay competitive in the market. Whether it is to get out of a difficult financial situation , improve the company’s infrastructure, optimize processes or invest in the modernization of the product or service itself, it takes capital that the entrepreneur often does not have at the moment, making it essential to take a loan.
For such an operation – the collection of credit – credit intermediaries prove to be extremely advantageous. So, understand what its function is and what its benefits are!
- Crowdfunding as an alternative to getting loan
- How it works
- The usefulness of credit intermediaries for companies
Also called financial intermediaries, they are agents (usually financial institutions) who take care of the credit and loan service.
Its function is to mediate between credit savers (surplus agents: investors, institutions, companies, etc.) and credit borrowers (loss agents: individuals or legal entities who need capital for a particular activity).
That is, the savers provide sums in sight to the borrowers, who pay back with interest. The intermediaries are responsible for all the processes of this operation so that it happens in the safest and most transparent way possible and, in exchange, they get a percentage of the interest.
Examples of financial intermediaries include public and private banks, credit cooperatives and real estate credit companies.
Crowdfunding as an alternative to getting loan
The peer-to-peer lending is a type of credit that has been increasingly used. This modality arose to make the operations of giving and taking credit less bureaucratic, more agile and simpler.
How it works
The crowdfunding process is based on a closer proximity between borrowers and borrowers, removing traditional financial institutions from the scene.
Generally, entrepreneurs send their proposals to a crowdfunding platform and, if approved, are available to investors, who decide whether or not to support those deals. The entrepreneur decides how much he needs and each investor gives up the amount he wants until the total is acquired.
One of the main advantages is in terms of interest rates , which tend to be much lower than those practiced by banks.
The agility and ease of the process also stand out, as well as being an operation that can be performed completely online.
The usefulness of credit intermediaries for companies
We already know that it is possible to get loans from financial intermediaries. However, its usefulness to companies is due to the variety of values and deadlines available in the market.
Hardly, in the service offered by the credit institutions, the capital sought by the entrepreneurs for the most diverse activities will not be available. That is, if well planned, it will always be possible to have access to the loan needed to expand the business and achieve the goals of the company.
Of course, everything must be properly structured and organized so that the loan does not become a complicated debt to pay. Therefore, it is also important to carefully research market options and observe interest rates.