Finnvera working capital business loans and loan guarantees available to SMEs
Published on 08 February 2022
Finland
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About this good practice
Finnvera is a special financier owned by the State and the Export Credit Agency (ECA), Finland's official export guarantee agency. Finnvera working capital business loans and loan guarantees are available to SMEs, including crafts companies.
Finnvera makes it easier for companies including craft SMEs to qualify for bank loans of working capital by providing loan guarantee protection. SMEs may not otherwise qualify for these loans because they lack collateral or sufficient income or assets. Working capital can be used for purposes such as increasing inventory or receivables.
Many SMEs, and especially craft sector SMEs, are struggling because of the COVID-19 pandemic. Finnvera has adapted its Working Capital Loan Guarantee in response to these challenges.
1. The initial guarantee is intended for companies that have been in business for a maximum of three years. In the initial guarantee, Finnvera's guarantee share does not exceed 80%.
2. The SME guarantee is intended for companies that have been in business for more than three years and can guarantee a loan of up to €150,000 from the bank.
3. The Finnvera guarantee can also be used to finance the increased working capital needs of companies due to the Coronavirus, if Finnvera's initial guarantee or SME guarantee is not suitable for the company's needs.
Finnvera makes it easier for companies including craft SMEs to qualify for bank loans of working capital by providing loan guarantee protection. SMEs may not otherwise qualify for these loans because they lack collateral or sufficient income or assets. Working capital can be used for purposes such as increasing inventory or receivables.
Many SMEs, and especially craft sector SMEs, are struggling because of the COVID-19 pandemic. Finnvera has adapted its Working Capital Loan Guarantee in response to these challenges.
1. The initial guarantee is intended for companies that have been in business for a maximum of three years. In the initial guarantee, Finnvera's guarantee share does not exceed 80%.
2. The SME guarantee is intended for companies that have been in business for more than three years and can guarantee a loan of up to €150,000 from the bank.
3. The Finnvera guarantee can also be used to finance the increased working capital needs of companies due to the Coronavirus, if Finnvera's initial guarantee or SME guarantee is not suitable for the company's needs.
Expert opinion
Loan guarantees are known as an efficient way to support businesses on a broad scale through the banking system, which is familiar to all businesses, or specific financial institutes. Those schemes, working on classic economic conditions, are well adapted to support growth (e.g. export development program) but also the continuation of economic activities in terms of crisis not directly dependent from single businesses, such as Covid-19.
In the case of this programme, the specific conditions (low amounts of loans) that make it accessible for craft SMEs are noteworthy. Craft SMEs has mostly low working capital reserves so that such opportunities can really make a difference.
In the case of this programme, the specific conditions (low amounts of loans) that make it accessible for craft SMEs are noteworthy. Craft SMEs has mostly low working capital reserves so that such opportunities can really make a difference.
Works at
Interreg Europe Policy Learning Platform
Resources needed
- Applicant companies may receive de minimis deferred State aid support from different countries or municipalities up to max €200,000 over 3 years
- Coronavirus support, temporary State aid framework
- 369 Finnvera employees
- Domestic financing 3.2 billion loans can be as small as €10,000
- Coronavirus support, temporary State aid framework
- 369 Finnvera employees
- Domestic financing 3.2 billion loans can be as small as €10,000
Evidence of success
- Finnvera is State-owned and is, as required, profitable from its own activities.
- Credit ratings: Fitch AA+; Moody's Aa1
- Overseas 3.2 billion € domestic financing; 21.5 billion € export guarantee and special guarantee activities
- Serves 26,319 customers
- SME and midcap export credit guarantees and export guarantees: EUR 21,971 million (EUR 22,408 million)
- CEO Pauli Heikkilä, 2021 ½ year report: “The financing system has worked well in Finland throughout the crisis.”
- Credit ratings: Fitch AA+; Moody's Aa1
- Overseas 3.2 billion € domestic financing; 21.5 billion € export guarantee and special guarantee activities
- Serves 26,319 customers
- SME and midcap export credit guarantees and export guarantees: EUR 21,971 million (EUR 22,408 million)
- CEO Pauli Heikkilä, 2021 ½ year report: “The financing system has worked well in Finland throughout the crisis.”
Potential for learning or transfer
Other countries could run similar programs. On the federal level, such a program helps to stabilize the national economy by making it easier for craft SMEs and other businesses to borrow funds for working capital. In Finland, the default rates have not been high and the program is successful overall. The success of a similar program would probably also need a high rate of loan repayment.
This kind of program is especially helpful for small craft businesses which may operate with small margins and very limited capital. It can make the difference between qualifying for a loan and being able to continue operations or not. Loans can be as small as EUR 10,000, making it a viable option for many SMEs.
This kind of program is especially helpful for small craft businesses which may operate with small margins and very limited capital. It can make the difference between qualifying for a loan and being able to continue operations or not. Loans can be as small as EUR 10,000, making it a viable option for many SMEs.
Further information
Website
Good practice owner
You can contact the good practice owner below for more detailed information.
Organisation
Finnvera
Finland
Helsinki-Uusimaa
Contact
International Project Officer