Financing a start-up - Get a business loan for a new business

Why banks reject start-ups

Are you thinking of starting a business, or perhaps you have just started a new one? Unfortunately, borrowing money from a bank for a start-up business is often not easy. Firstly, the risk is highest at the beginning, before the business has even started, and secondly, the amounts are quite small. The bank likes low risk and will lend large sums to large businesses. It is simply not worth the bank's time to spend on start-ups.

What counts as a start-up?

A start-up company is a company that has not yet started business or submitted its first annual accounts to the Finnish Trade Register. Some banks require up to three sets of accounts to be considered as a start-up. At Qred, we believe this is wrong, as the first three years of a company's life are the most difficult. This is when you may need temporary working capital to grow and sustain your business.

A business loan to start your own business

Before applying for a business loan, you should be familiar with the basics of the business. What is your business going to do, how much money do you need to get started, how much can you pay back per month? These things should be carefully considered so that you can apply for the right amount and can clearly explain how the loan will be repaid.

What type of loan is best for start-ups?

• Traditional bank loans are best suited when the company is well established and has a proven cash flow.
• Qred's business loan is best suited to situations where a company has a temporary need for liquidity. Qred is one of the few providers that also offer loans to start-up companies.

Qred's business loan is best suited to situations where a company has a temporary need for liquidity. Qred is one of the few providers that also offer loans to start-up companies.

Loans for start-ups

In a Qred Score, we assess the creditworthiness of the applicant company. The loan applicant must be a registered business owner. If you wish, you can also add one or more people to guarantee the loan with you. The requirements for a personal guarantor are as follows:

• The person must be a Finnish citizen.
• He or she must have his or her personal finances in order
• No default entries

In most cases, a default entry will prevent a loan from being granted. You may be offered a smaller amount at a slightly higher rate before the default note is cleared.

Loans to new business investors

As a newly established sole trader, it can be difficult to find the right kind of funding. Often it is a slightly smaller business, which may be seasonal or otherwise volatile. Banks have traditionally found it difficult to offer cheaper loans to sole traders. It is often not profitable enough for banks. At Qred, we think this is wrong, and that's why we want to help smaller and start-up businesses get access to finance. We offer loans in proportion to the size of the business, so as the business grows, the loan amounts can also increase. 

Another option is to use Qred's corporate credit card, Qred Visa. This saves you individual costs and complex accounting. All payments are collected on one invoice and it is perfect for everyday expenses and purchases.

Loans for start-ups

As with all other loans granted by Qred, it can be an advantage if you can get one or more other people to guarantee the loan with you. Personal guarantee means that you are personally responsible for paying the loan if the company fails to meet its payment obligations. If you and any other guarantor are in good financial health, this will have a positive impact on both the loan itself and the terms of any loan. 

Loans to newly created limited partnerships

As mentioned, Qred can help most types of companies with financing, and limited partnerships and general partnerships are no exception. 

Credit rating for start-ups

When you apply for a loan for a start-up business, a credit assessment is carried out. It is quite rare for a credit rating to be particularly high for a new business, because credit reference agencies have no history to base an assessment on. As a business, you earn a high credit rating by consistently making steady and predictable sales and profits and avoiding any kind of default.

At Qred, we have our own Qred score, which takes into account the company itself, its history and the people behind it. Call our customer service team or submit an application online to get a professional assessment and a fast credit decision.

People call Qred almost every day to ask if they can apply for a loan to finance a start-up. The first question we ask is whether the company is registered in the Finnish Trade Register (i.e. whether it has a valid business ID). Then we find out what stage of development the company is at and what its needs and liquidity are. Business loans are an important part of the financing package, but there are often many financing options to consider in order to put together a solution for your business that will meet both your short and long-term needs.