The economy has now picked up considerably. Nevertheless, it is often still difficult for businesses to borrow money from a bank. However, these days you are no longer solely dependent on the bank for financing. A new financing market has emerged, one that can complement the familiar banking sector. In addition, the government also offers extra financial support. Would you like to find out more??
Private funding
Every entrepreneur is familiar with private investors. Whether they are family, friends or business associates, for many people they are indispensable when starting a business, helping to secure additional capital or a loan. However, this personal network does not always provide a solution. As your funding requirements, the risks involved, and the scale and complexity of your plans increase, you will need to look for other forms of financing sooner – either as an alternative or to supplement your existing arrangements. The private financing market offers a wide range of potential lenders.
Tip: When considering alternative sources of finance, don’t forget supplier credit, mortgage lenders, leasing companies and factoring. It’s worth considering for your cash flow!
Business angels
Also known as informal investors. They are usually private individuals who, whether organised into a group or not, contribute their knowledge, experience, network and capital to start-ups or young, often innovative businesses. For these investors, it is all about a sound business plan and belief in the entrepreneur. They also have the willingness to make risk-bearing investments. The entrepreneur receives venture capital. The informal investor gains a share in the control, ownership or profits of the company.
Tip: Find out about business angel initiatives and events in your region or further afield. They bring entrepreneurs and investors together!
Private equity
Investment and private equity firms, also known as private equity firms, are generally private companies bringing together both smaller and larger investors. They can provide the necessary risk capital that you, as an entrepreneur, need to successfully secure the financing you require from other lenders. Risk capital can be provided in the form of both share capital and a (subordinated) loan. The driving force behind private equity is return on investment!
Credit Union
A new form of financing with a cooperative twist. A credit union is a cooperative credit association for SME entrepreneurs. The aim of a credit union is to lend money to fellow entrepreneurs within a sector or region through a common fund. Both lenders and borrowers are members and co-owners of the cooperative. The credit union is a not-for-profit organisation and aims to provide loans of up to €250,000. The number of credit unions is expected to grow rapidly.
Crowdfunding
This form of financing is rapidly gaining popularity. It is an online marketplace for financing. How does it work? The entrepreneur posts their idea or plan on one of the crowdfunding platforms and appeals to a number of private investors for funding. You set the loan amount, interest rate and term yourself. If you wish to offer the investors shares in the company or a percentage of turnover or profit in return for their investment, that is also possible. Investors can subscribe until the subscription is full, after which your funding is secured!
Please note! The regulations governing alternative forms of financing are still in their infancy. Check that the crowdfunding platform holds an AFM licence!
Dutch Investment Agency
A new initiative was also launched during 2014: the Dutch Investment Agency. This organisation acts as an intermediary and point of contact to engage institutional investors, such as large insurers and pension funds, in the financing of major projects. The investment institution focuses on projects that are fundamentally profitable but, for various reasons, are unable to secure the necessary bank financing.
The government as a co-funding body
With a helping hand from the government, you, as an entrepreneur, have a better chance of successfully securing a loan from credit institutions. Even if your plans and financial prospects are excellent, without sufficient collateral your loan application will quickly be rejected. That is why the government has introduced various schemes to facilitate access to the credit market.
SME Loan Guarantee Scheme (BMKB)
For business owners who need financing but do not have sufficient collateral, the BMKB offer a solution. However, this is subject to the condition that the future prospects are favourable and that the lender submits an application for this. If you have been in business for less than three years, the Starters BMKB scheme is available to you. Under this scheme, you can obtain up to €266,667 in credit, with the government acting as guarantor for 67.5% of the loan.
Are you no longer a start-up, or do you require a larger loan? In that case, there is also the standard BMKB scheme, intended for businesses with no more than 250 employees (FTEs) and an annual turnover of up to €50 million or a balance sheet total of up to €43 million. The lending criteria regarding loan size, repayment and term depend on the intended use of the funds and the type of business.
The standard BMKB scheme has been temporarily extended until 31 December 2017. For credit requirements of up to €266,667, it is possible to finance three-quarters of the amount with a BMKB loan (the limit is normally set at a maximum of half the loan amount). The maximum amount of the BMKB loan has also been temporarily increased from €1 million to €1.5 million. A government guarantee of 90% applies to the BMKB loan.
For innovative entrepreneurs who hold an R&D certificate, the government also offers a supplementary guarantee scheme under the BMKB scheme.
Tip: When applying for a loan, ask the bank (or non-bank lender) whether you are eligible for the BMKB!
Innovation Loan
If you have an innovative idea but are simply lacking the funds to invest further, the Innovation Loan may be the solution. It can be used to finance promising innovation projects. It is a risk-bearing loan. The interest rate varies from 7% to 10%, depending on the risk profile. The maximum loan amount is €10 million.
Microcredit
Many entrepreneurs have already benefited from a relatively small loan. However, their risk profile hinders their access to bank credit. In such cases, consider microfinance. The current credit limit is €50,000. The scheme is open to start-ups and existing entrepreneurs in small and medium-sized enterprises and is administered by Qredits Microfinance Netherlands. Qredits only comes into the picture if the bank has rejected your loan application.
SME loan
For several years now, Qredits We also offer the SME loan. This is a business loan for start-ups and existing entrepreneurs in the SME sector, ranging from a minimum of €50,000 to a maximum of €250,000. This loan is specifically designed for entrepreneurs who need financing but are unable to obtain it from a bank. However, a number of conditions apply.
For existing business owners who unexpectedly need extra funds for their business, there is the flexible loan; and Qredits offers a mortgage loan specifically for the financing of commercial property.
Early-stage funding
If you are ambitious, your business is set to grow substantially in the near future, and you wish to explore whether your idea has a chance of success in the market, then Early-Stage Funding might be right for you. With a loan under this funding scheme, the government can support you in taking your idea from the planning stage to the start-up stage. Naturally, you will need to repay the loan, including interest at 4.93% (as at 1 January 2017).
Growth Facility
Whether you want to grow your business independently in the Netherlands or abroad, or you want to take over a company, the Growth Facility help you secure the necessary risk-bearing finance. The Growth Facility provides financial institutions with an additional guarantee, which may be just enough to convince the financiers (bank or private equity firm) to go ahead. Please note that the Growth Facility is not intended for refinancing. The guarantee is limited to 50% of the financing.
Business Financing Guarantee
There is also the option specifically for medium-sized and large companies that operate mainly in the Netherlands, are financially sound and have good prospects for the future, namely the GO scheme. Under the GO scheme, the bank can obtain the necessary additional security through the 50% government guarantee. Loans of up to €150 million are guaranteed for up to half the amount.
In conclusion
The schemes discussed here are just a selection from the growing range on offer. We can explore the opportunities and pitfalls with you to ultimately arrive at a suitable financing solution.