alternative credit and funding opportunities

Credit and funding opportunities can be divided in equity and debt capital. “Genuine

own money”, public funding, gifts and donations, cooperative and other company

shares and private loans are summarised as equity. Examples for debt capital are

loans from public or special financing institutions, instruments of the german GLS

Bank like “loan and gift community loans” or guaranteed loans, loans offered by the

public sector and land charge loans offered by local banks (Stiftung trias 2017, 9)

“Classical” funding opportunities are deposits and loans, which are backed up by

security values (Schneck 2006, 11), like land property or building leases (Stiftung

trias 2019, 16). In opposition, any other funding opportunities can be defined as

“alternative”. A classification about what is “alternative” is defined, in accordance to

their standards, by the risk management of each bank or money lender, in order to

determine risks of lending capital to costumers and their and stability. Most banks see

any loan which is not secured by land or buildings as “alternative financing”.

In addition, people, who do not have access to the classic sources of funding, have

developed new ways for getting access to capital and other sources needed for a

project to become reality. “Alternative” means in a lot of cases sharing the risk within

a group of people by dividing it into small guarantees. Examples are company shares

or “loan and gift community loans” or (a group lends money together, everyone

guarantees a small amount (a group lends money together, everyone guarantees a

small amount) or other different forms of crowdinvesting.

A number of banks have developed guidelines to evalute the risks of certain funding

opportunities and are able to deal with these funding opportunities.

Literature:

Schneck, Ottmar. 2006. Handbuch Alternative Finanzierungsformen. Weinheim:

WILEY-VCH Verlag.

ISBN 978-3-527-50219-6

Stiftung trias. 2017. Die Finanzierung zivilgesellschaftlicher Projekte. Hattingen:

Stiftung trias.

Stiftung trias. 2019. Bürgerfonds für Fachwerkstädte: Gemeinsames

Forschungsprojekt. Hattingen: Stiftung trias.

ISBN 978-3-948240-02-8

Cooperative City Books. 2017. Funding the Cooperative City. Edited by Daniela Patti

and Levente Polyák. Vienna: Eutropian Research & Action.

ISBN 978-3-9504409-0-4