Everything about Small and Medium Business & Business Loans.

In the age of innovation and still-emerging start-ups, questions about financing business activities appear periodically. According to some sources, in 2018 over 90 percent. companies intend to finance their development from their own resources (an increase of 10 pp. compared to 2017), while only over 27 per cent. plans to use funds from European Union programs.

Currently, business entities have various forms of financing at their disposal. Demand for capital depends on many factors, for example: the degree of development of the company, or the type and risk of the project. Much depends on the business plan developed. The methods of obtaining financing and their availability are also diversified. As a consequence, many potential sources of capital, due to the need to meet the requirements of their owners, become unattainable for some interested entities that would like to set up their own business.

In practice, in the initial period of activity, enterprises are usually financed from the founders’ own funds and profits generated, which may seem to be the simplest and cheapest method of financing investment projects. However, as the needs grow, these sources may turn out to be insufficient and the owners have to make decisions about obtaining external funds, eg from commercial entities.

 

Own or External Financing?

 

The commercial entities financing the business are primarily banks . The largest of them have quite a diversified loan offer for companies. In addition, most of them offer products dedicated directly to entrepreneurs from the SME sector, and some also to start-up loans (“start-up loans”). However, not only loans, but also leasing or factoring are the financing instruments for enterprises. So let’s think about this form of raising funds.

It is also a good idea to delve into the terms of receiving an EU grant or subsidy from the Poviat Labor Office. The amount of subsidies for new companies can amount to PLN 40,000, respectively in the case of subsidies from the EU or 20,000 in the case of grants from PUP. However, a number of requirements must be met to apply for such support.

Companies can also raise funds from regional programs carried out within individual voivodships.

Acquisition of EU funding is also possible through EU framework programs for 2014-2020, ie COSME or Horizon 2020. In their case, support is not provided as a subsidy, but through financial instruments in the form of preferential investment loans and turnover, leasing or loans. The offer is available to a wide range of entrepreneurs – it can be used both by people starting their business activity, as well as by existing SME sector entrepreneurs and large companies. However, according to the Kronenberg Foundation research, only every third micro-entrepreneur tried to use EU funds.
Data on raising funds to finance operations were presented, among others by the Polish Agency for Enterprise Development, in the publication: “Report on the state of the SME sector in 2017”.

It turns out that very few enterprises from the SME sector still use the external sources of investment financing. It uses slightly more than 17.5 per cent of domestic credits and loans for this purpose. of them. General investment expenditures of SMEs in over 62%. cases come from own resources.

 

What can You Do to Collect your Own Budget?

 

Own or External Financing?

 

It is very important to make realistic assumptions. If the business plan is well done, it should contain information about initial costs, as well as predict all fixed costs that will be incurred in the first months of operation.

The first source to reach for is your own pocket. Covering your first expenses with your own savings not only protects you from debt, but also motivates you, because nobody likes to lose your funds. Savings can be collected in various ways and through various tools. The most important is regularity and putting aside small amounts.

Tips on how to do it can be found, inter alia, on the portal prepared by Vienna Life – Viem.pl. It is prepared by experts – both scientists, TFI specialists and practitioners who advise clients on a daily basis. The goal of the platform is to provide reliable, substantive, and at the same time, information on finances written in an accessible way to everyone, regardless of the wealth of the portfolio.

It is often a good idea to set up a simpler business that requires less investment to accumulate adequate capital. The budget thus accumulated may allow to cover significant resources for the start of a larger, more demanding undertaking.

Depending on the size and expenditures required, there are many opportunities to raise capital. However, one should carefully prepare and analyze whether a given solution is suitable for us. Often, advice from a financial advisor opens the field for new opportunities.

 

 

 

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