In a previous post, we outlined how getting access to money may be one of the biggest challenges you face as a business owner. Most businesses take several months if not years to generate sales and profits. Hence, you need to be prepared from the beginning with enough funds to manage your enterprise. So, how can you get loans to help support and build your company?
Both small and large scale companies find themselves facing a challenge in securing funds. And this is more difficult for small sized businesses or start ups.
Why a business needs a loan?
A business loan may typically be needed for,
- Supporting your startup – This is generally the most challenging phase. You generally need funds for issues such as – office set up, website development, putting a team together, etc. Risks are high at this stage and securing funds is difficult. Financial institutions, particularly bigger banks, know the risks of a business at this stage and are generally careful while giving out loans. Hence, as a business owner, you should look at alternate way of finding funds, which may be easier and faster to get.
- Loans to help you expand the business – While managing your business, you may need funds from time to time to help expand operations. Purchase of new machinery to increase production, buying new vehicles to increase deliveries, investment in new technology, are some reasons you may want a loan to help your company grow.
- For working capital – Working capital is the money needed to help run your company’s day-to-day operations. Monthly bills, salaries to employees, etc. – every business needs to have funds to meet these costs. A business loan can provide you with sufficient funds to manage these costs and give you peace of mind.
Where can a business get a loan from?
- Bank loans
Sweden has a total of nearly 117 banks. Of these, the four largest banks – Swedbank, Handelsbanken, Nordea and SEB – control a majority of the total market. However, these banks loan money to more established and bigger businesses. In the case of smaller businesses, the documentation, timelines and even cost of loan may be higher with these banks. (Typical tenure and rate for say, SEB, – Corporate loan)
Hence, if you are an SME business, you should look and mid-sized or niche banks.
- State funded loans
Here in Sweden, you could opt for government-backed funding programmes aimed at startups. Some of these include loans from agencies including ALMI, Vinnova, and Tillväxtverket. For example, ALMI grants loans up to SEK 200,000. (To discuss more such opportunities, drop us a message here).
Besides ALMI, another state funded loan is Tillväxtverket (The Swedish Agency for Economic and Regional Growth). This agency offers many loans across different business areas.
- Non-bank institutions / Alternative lending platforms
This is a popular way for smaller businesses to access funds. These platforms offer more flexible terms on loans as compared to large institutions including the tenure, interest rate and documentation, etc.. And, these are generally approved on a faster basis.
If you want to grow your business call us so we help you find best financing solution.