Archive February 24, 2019

What Are Shareholder Subordinated Loans And What Advantages And Disadvantages Do They Have?

Investing in start-ups in Germany takes place mainly through shareholder subordinated loans, but what kind of instrument is that actually?

The term “shareholder subordinated loan” has three main components. If you go through it from back to front, you realize that it is primarily about a loan. As an investor, I leave a certain amount of money to my contract partner for a temporary period and receive interest.

The subordinate prefix means that my loan receivable is deferred in comparison to other claims of third parties, ie if the contract partner (here: the start-up) becomes insolvent, it can be assumed that any returns from the bankruptcy estate will only be third Parties benefit. The word “shareholder” means that my income as an investor depends on the performance of the company in which I have invested. As a refund I receive an amount depending on the turnover or the profit of the company.

Disadvantages of the shareholder subordinated loan

Disadvantages of the shareholder subordinated loan

I suppose I did not exactly make you tasty subordinate loans so far. Obviously: As an investor I have a similar position in monetary terms as the shareholder, but I do not have the information and control rights of a shareholder and of course no participation.

In addition, the share (and GmbH shares) and their properties are regulated by law in the Stock Corporation Act, whereas the shareholder subordinated loan is more flexible in its design, ie most of the properties of the loan are regulated in the loan agreement. Let’s just be like this … I’m not a lawyer, but generally I prefer a legal regulation of the financial instrument to have legal certainty.

And what are the advantages?

And what are the advantages?

I had already indicated that I had limited my investment activity in Germany and only invested in the UK, because platforms such as Seedrs offer real company shares there. I do not regret the move either, but partiary subordinated loans have, in my opinion, earned a better reputation. I even go so far as to say that they are at least as good as stocks, depending on the investment strategy.

A big advantage is the transparency in the evaluation. As a rule, the valuation is contractually regulated and comprehensible for anyone who can operate a calculator. This makes the fair value of the share more transparent because the receivable can be quantified against the company. For a share without a standalone market, the valuation is much more difficult.

The second big advantage is the ability to liquidate. As a result of being able to terminate the loan, at a certain point in time I can simply withdraw my claim, whereas for a share I have to find a buyer. Honestly, it should also be mentioned here that the start-up is also entitled to terminate and repay the loan after a certain time, which is a disadvantage if I prefer to stay invested. This can not happen to a stock.

Theoretical advantages of the shareholder subordinated loan

Theoretical advantages of the shareholder subordinated loan

In addition, subordinate loan subordinates have two other advantages, but they are more theoretical. First, the loan is repaid at par, ie in case of bad performance of the company, the loan does not lose value and you get the face value plus interest repaid. Stocks do not have such “protection”. However, in such a case it is unlikely that the company can repay anything at all (hence theoretically).

In addition, in the event of bankruptcy, the lenders have access to the bankruptcy estate before the shareholders. In fact, however, it can be assumed that in the case of young companies, no returns from the insolvency estate can be expected for both groups.

Therefore, it should also be clearly and clearly stated at this point: Subordinated subordinated loans are subject to a high degree of risk. Total losses are not uncommon. Only those who can tolerate the loss of capital invested should invest in such investments.



I can invest in subordinate subordinated loans in young German companies, which otherwise would only be possible with great effort. Partial subordinated loans have far more advantages than you think. Depending on what investor’s investment philosophy pursues, investing in a shareholder subordinated loan may be better suited for him than a stock investment in the same company.

Calculation of the Debt Ratio

Simulation with the calculator

To calculate your debt ratio in just a few seconds, you only need to enter in the first field your annual net income and in the second the monthly installments of current credits . Specify if you own or rent, that’s all.

The data entered must only contain numerical values!

The data entered must only contain numerical values!


Annual net revenue

Current monthly payments (M1 + M2 + ..)

Are you the owners? Yes no ________________________________________________________________________________________

You must take into account all of your net annual income. For example, your monthly net salary multiplied by 12, plus any bonuses (13th month, holiday bonus …). Add ancillary income such as alimony or rents collected in the year.

Be aware that banks rarely exceed a debt ratio of 33%, even if the risk analysis is global and covers other elements such as the ” remainder to live “, that is to say the sum remaining in once paid the different monthly payments, the professional stability or the good performance of the bank accounts.

Do not count all your income

The calculation of the debt ratio takes into account only the certain incomes of co-borrowers. For example, 13th month bonuses or holiday bonuses are taken into account and considered as remuneration. On the other hand, incentive or participation bonuses are not included in the calculation due to their random nature, even though their payment has been recurrent for several years.

For housing assistance ( APL , housing allowance) or family allowances, be aware that banks sometimes weight their amount according to the age of children or the situation of borrowers.

More generally, she wants to make sure before accepting to finance your project, that your income will be paid regularly during the loan period. Although there is no guarantee that you will keep your current employment situation and that your income will remain stable, it seeks to minimize the risks of departure and to ensure that you are able to meet the monthly payments .

Example calculation of the debt ratio

Let’s take a simple example with a couple of borrowers whose annual professional income net of expenses amount to € 35,000. Mr. receives in addition to a premium of thirteenth month and Madam of a bonus of profit which varies according to the years of 1200 to 1800 €. The couple has two children aged 2 and 4. They therefore receive a monthly APL of 128 €.

They also refund a car loan that will end in three months and for which they repay 150 € monthly.

They want to buy their home. For this, the bank’s financing plan proposes a repayment schedule of € 850 per month.

All income is taken into account with the exception of the incentive bonus because of its randomness. The 13th month will however be counted.

Amount of net income: € 35,000 + € 2,500 + (128 * 12) = € 39,036

Results of the calculation of the household debt ratio :

  • Before realization of the real estate project: (150 * 12 * 100) / 39 036 € = 4,6%
  • After purchase of housing: ((150 * 12) + 850) = 30.74%



This is a folder that will not pose a problem. On the one hand the debt ratio is lower than 33% and on the other hand, the rest to live is enough for a couple with 2 children. If the couple has more than a personal contribution, it will even be in force to negotiate the best rate conditions, because the file will interest the bank.

Regarding the consumption loan, it could almost not appear in the calculation due to the low remaining time. In fact, at this stage, it is necessary to take into account the time needed to release the loan, ie about three months. The couple will no longer repay the car loan when the mortgage will be released. In any case, given the small capital left over, it could easily be repaid.

Sales Pipeline: Learn In 5 Steps How to Set Up Your Business

Sales Pipelines are made by entrepreneurs to become more efficient in their goals. But not all business professionals know how to put together a well-structured and useful daily activity map. And if you’re one of them, you’ve come to the right place. Learn how to do it and put it into practice in your company!

When it comes to new business, especially those in the digital world, it’s important to have a well-tied and connected flow to the sales funnel, as Pipeline is also known. The management of this dynamic is vital for the maintenance of the business and its proper functioning as a whole.

What is a Sales Pipeline? What is it composed of?

What is a Sales Pipeline? What is it composed of?

The Sales Pipeline is a map of activities that must be done frequently in the company, composing the sales process in all its stages. Your structure should start on receiving the first contact and go through to closing the deal.

The goal is to transform the art of winning customers into a more practical and schematic activity. Everything that floats through the pipeline must follow every step of the negotiation, but do not think that makes the process easy.

We can not confuse the pipeline with a cake recipe to be followed, each company has a differentiated formation and flow. Therefore, it is essential to have a thorough knowledge of the individuality of your business.

We will list here the 4 main foundations that should receive attention and you can add those that are interesting to your workflow.

Number of pending trades

Perhaps this is the data that is most needed when starting your Sales Pipeline. It consists of knowing how many pending issues there are, as well as the levels at which they exist. Here, you should know how many trades need to be closed to the system if you pay and do not close the month in the red. Know your average ticket and your management metrics so you know the quota of leads needed to close the month.

A good way to do this is to record all this on a Trello . Start by creating a column with what’s pending, and then start tagging, or move to the next columns we’ll talk about below;

Click here and read about the importance of Management Platforms and Software for your company .

Possible Leads

Possible Leads

Second column that can be easily associated with the first. It concerns those contacts where we already have an open door, but not necessarily a business. For example, clients who have scheduled meetings, e-mails registered to receive the newsletter, and the like may be mentioned;

Statement of Interest

Here, the individual already becomes a great possibility of business closed! The first phase has passed, the person liked your proposal and this already makes it an important lead and deserves enough care. Add to the flow the possibility of presenting proposals in a more aggressive way.

Click here and read about Financial Planning for your company.

Proposal Acceptance

At this stage, the person is already a customer. In this case, the service team must already take action with the budget and, if necessary, the activation of the Finance and Legal teams;

Accepted quotation

Phase that comes soon after receiving and accepted the budget, concerns the move to the next phase, which is the invoice payment;

Invoice Paid

Invoice Paid

Now the work can begin, the team can already deliver the merchandise and the cycle is over!

How to Make More Money with the Sales Pipeline

How to Make More Money with the Sales Pipeline

Having more control over your business and sales opportunities, profitability comes as an unavoidable consequence. With each step the client passes, you will be aware and your mental triggers will be triggered so that you can take a differentiated measure to that character.

The funnel provides the seller or attendant with a series of possible activities and approaches in the sales timeline. With this information, you can send an email with promotions, make a call or call for a visit, for example.

Because the creation of the pipeline is very specific to each company or professional, your sales pipeline will most likely combine with your business as a glove.

Some questions to help you create the Sales Pipeline

Some questions to help you create the Sales Pipeline

  • How long is the sales cycle for my company?
  • How many surveys and consultations were done in the last cycle?
  • What is the sales conversion rate?
  • What is the turnover of the last cycle?
  • How many people are there in my client portfolio?
  • I need how many customers to close this cycle?
  • What are the particularities of my sales cycle?
  • What marketing measures does my company use?
  • What is the duration of the cycle that I want to establish?

With these questions in mind, your pipeline will be established in a way that is closely tied to your business. Remembering that it is good to be careful not to create too many rules and to plaster the pipeline in a bad and non-functional way.

Business is human relationships and subject to the subjective peculiarities of each person. So make your pipeline flexible enough to fit into any situation!

Get Organized

Get Organized

Small, medium or large, the enterprise must always be organized and well aligned. In that sense, choosing to make use of a Sales Pipeline is a smart choice to help in managing your venture.

Besides Trello that we mentioned above, there is an app also directed to this type of work: Pipedrive. In it, these phases can be easily adjusted, as well as scheduled a series of pop-ups and reminders for the phase changes.

Do you know another organizational platform? Well, do not forget to share with us in the comments. We hope we have helped you with our tips and hope to see you here for the next article!

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