At some point most companies will need external capital to finance new investments or even just to ensure liquidity during periods of growth or uncertainty. However, whether you are starting up a new company or are about to expand an existing company, you can almost be certain; getting hold of the much needed business financing will not be without a problem.
Traditionally the most common solution would be a bank loan, however in recent years Nordic banks have become considerably reluctant to approve loan applications from new entrepreneurs without a proven track record.
Making it almost impossible to get hold of a business loan from Swedbank, Nordea, Handelsbanken or Danske Bank, forces small business owners to take up personal loans form friends and family, and in doing so, jeopardizing their personal economy. This is not only a problem for the individual business owner, if the financial opportunities not significantly improve soon, more entrepreneurs might become reluctant to start-up new and potentially very successful businesses in the Northern parts of Europe.
Fortunately, right now several Fintech companies in the Nordic Countries are starting to offer tailormade lending opportunities and financing options to both small startups and midsized companies in need of investment capital. Most of which are unsecured loans with a personal guarantee that is not tied to a specific asset. In Sweden the number of unsecured business loans have doubled in a just a few years. Property investments, on the other hand, are typically financed by a mortgage loan and some business loans are secured against your invoices.
Most interesting is in any case the rise of social- or shared economy with crowdfunding and peer-to-peer lending at the forefront. Using crowdfunding, people and companies can help fund businesses in need of investment money and property project, in return of products, interest or even company shares.
In Finland the crowdfunding market has grown exponentially and many believe, we are currently in the midst of a financial revolution. Several new fintech companies in Copenhagen,Denmark and Oslo ,Norway are also focusing on making business financing more available to small and mid sized enterprises using crowdfunding concepts. But both of these countries are still lagging behind Finland when it comes to crowdfunding according to Firmalan.com.
Some experts predict that crowdlending will overtake a considerable part of the loan market in the future while other still don’t nessecerly think that peer-to-peer lending poses a 'major threat' to banks. One thing is for sure, companies will always be out looking for new and better business capital solutions.