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From the new year, a starting entrepreneur can apply for a start-up loan with KredEx guarantee only directly from the bank. So far it was possible to apply for start-up loan also by intermediation of Enterprise Estonia, but to simplify the loan application process, in the future an enterprise applying for start-up loan can perform all operations connected with the start-up loan in one place. The start-up loan of KredEx is meant for small and medium-sized starting enterprises and those having operated for up to 3 years, as well as for financing of new investments and operating capital of self-employed entrepreneurs. The programme of start-up loan is financed by the Social Fund of the European Union. Start-up loans with KredEx guarantee have been issued from March 2008. During that period, projects of 124 starting entrepreneurs have been financed in the amount of 47 million kroons. Mainly, enterprises use start-up loan for starting or expanding of activities, for investment into fixed assets and entry into foreign markets. According to Lehar Kütt, Manager of the Enterprise Division of KredEx, lack of guarantee or operating history necessary for bank loan may be a significant obstacle in starting of a company.
“To start from a good position, a starting entrepreneur may use start-up loan with KredEx guarantee, which significantly increases financing possibilities and supports quicker growth of starting entrepreneurs. Also, start-up loan makes it possible to manage risks connected with starting of entrepreneurship, as the personal liability of the entrepreneur is limited to 30-40% of the loan amount,” Lehar Kütt said.
A prerequisite for the above described loan is the existence of a business plan, which can be drafted with the help of free consultation from county development centres. In addition, an entrepreneur may apply for start-up and growth grant from Enterprise Estonia. Start-up loan is issued by Swedbank, SEB Bank, Eesti Krediidipank and Marfin Bank. A starting entrepreneur, or one having operated for up to 3 years, may apply for start-up loan with KredEx guarantee in the amount of up to 1,000,000 kroons. Out of that amount, up to 500,000 kroons may be used for financing of both investments and operating capital, the amount exceeding 500,000 kroons may be used only for investments.
Differently from a regular loan product, in the event of a start loan, a personal guarantee of an entrepreneur of 30-40% of the loan amount is considered sufficient. KredEx provides its own guarantee for the remaining, unguaranteed amount.
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