The emergence of new small businesses plays an increasingly important role in the former agricultural and industrial communities in the Nordic region. In Sweden, 4 out of 5 new jobs are created in companies with fewer than 50 employees and the trend is the same in neighboring countries. Both Finland and Denmark have undergone an IT revolution in recent years a new generation of fintech companies has emerged.
The fact that the Nordic region is a good place for self-employment is clear, in Forbes annual ranking “Best countries for business”, all Nordic countries rank top 20. A couple of things especially mark these countries, low corruption, good infrastructure and high technology. But what is a delight in the cup of joy is the difficulty of finding financing for start-ups. Nordic banks are generally very restrictive in granting loans to companies if it is not a well-known serial contractor.
The EU wants to stimulate business
The Euro Moneylink Bank, jointly owned by the EU countries, has commissioned by the EU Commission the Investment Fund EIF, which aims, among other things, to invest venture capital, offer guarantees and lend money to SMEs in the EU / ESS area.
USD 20.3 billion in funding for 195 different Swedish projects.
USD 20 billion in funding for 304 different Danish projects
USD 16.8 billion in funding for 210 different Finnish projects
A significant part of this project financing has been EU-guaranteed bank loans, credit lines, guarantee guarantees and business loans in Sweden, Finland, Denmark (EU) and Norway (ESS) intended for micro enterprises. Although Norway is not part of the EU, there are still several well-established collaborations and agreements between them and the Union within the framework of the Horizon 2020 development project.
Business loans without collateral
EU funding has been crucial for a number of small businesses in the Nordic countries, yet these financing opportunities only help a very small part of all capital needs. Therefore, many companies want and need to borrow from the bank, but the major banks make more money for private individuals and households, while the risks of lending are considered lower for these groups, therefore the interest is generally cool for corporate lending.
In the vacuum that has arisen, a number of smaller lenders have begun offering unsecured corporate loans. Instead of allowing public limited companies / trading companies themselves to provide security, they let the company signer / company owner act as a personal guarantee. This means that he / she assumes personal responsibility for the debt being repaid in its entirety, even if companies, for example, go bankrupt.
The fact that more credit institutions are now entering the match if corporate customers are positive, this gives more businesses access to capital, while increased competition can in the long run push down interest rates, which today are often unreasonably high for corporate loans. Similarly, it is important that the opportunities for companies to compare the costs of different financing alternatives be improved.
Innovative financing methods
In the scenes, a bank revolution is underway, driven by new innovations. Digital platforms for crowdfunding and peer-to-peer loans, new currencies such as cryptocurrencies and more efficient payment solutions and faster credit ratings are all examples of a market that is undergoing a major change.
Exactly what the financial market will look like in 10-20 years is hard to say, but there are signs that a lot may look different then. Finland today has the largest crowdfunding market in the Nordic region, and is estimated to account for approximately one-seventh ($ 56 million – 2017) of investment capital ($ 349 million – 2017) that start-ups take in externally. USD 56 million may not seem so remarkable, but then you should consider that lending doubled from the previous year ($ 28 million – 2016). Right now, the trend is clear across most of the world, crowdfunding is gaining ground almost everywhere.
At the same time, the technology on the development drives several other fronts, for example, more and more transactions are happening online and digitally instead of with cash. The opportunities to create new structures and markets have never been greater than they are today, the question is probably not about, but rather when one of the world-leading global companies Google, Facebook, Apple or Amazon decides to create and offer some kind of banking service to its users.