Finnvera as a Financier – How to Build a Bankable Business from a Business Idea?

Finnvera is a specialized financing company owned by the Finnish State. It complements the financial market and shares financing-related risks with other financiers.

Finnvera strengthens the operating conditions and competitiveness of Finnish businesses by providing guarantees, loans, and export credit guarantees. Most of our financing is directed to start-ups, growing and internationalizing companies, investments, ownership transfers, and exports. The objective of Finnvera’s operations is impact: through our financing, companies can generate revenue, economic growth, and jobs that might otherwise not be possible.

Financing for a start-up typically consists of four key elements: investments, working capital, the period before the first revenues are generated, and the first steps of growth. Careful planning is essential in determining the most suitable financing solution and how the financing will be repaid.

Applying for financing always requires thorough preparation and calculations, such as a business plan, forecasts, and a breakdown of how the financing will be used.

The size of the financing need affects Finnvera’s role in the financing arrangement. The final solution is influenced by factors such as the company’s goals and plans, the adequacy of total financing, the market situation in the sector, the local competitive environment, and sufficient own capital in relation to an appropriate level of debt.

Sources of financing may include bank loans (debt financing) and equity financing. Finnvera can help secure your company’s financing by providing a guarantee for up to 80% of the company’s loan, provided the criteria are met.

Alternatively, a micro-enterprise may receive a direct loan from Finnvera if financing cannot be arranged through a commercial lender.

Finnvera’s financing application process is very similar to that of other financiers. At its core are the business idea and the basic concept: what is being produced, for whom, where, how, at what price, and what margin the business will generate. The competitive landscape is also assessed, including what differentiates the applicant from competitors already in the market. A key role is played by the entrepreneur’s business plan, calculations regarding financing needs, and forecasts for the business.

By preparing a business plan, entrepreneurs gain a deeper understanding of their business and a broader perspective on its operations from multiple angles. Financial calculations, as tedious as they may sometimes seem, provide valuable insights into matters such as pricing and profitability.

Our financing is always provided on a commercial basis. For example, we charge interest on loans and guarantee fees for guarantees, as our operations must be financially self-sustaining.

Finnvera’s credit policy enables the financing of companies that have the prerequisites for profitable business operations. Since our financing is always subject to compensation, it is important to take financing costs into account in financial calculations.

It is in everyone’s interest that Finland has businesses that create jobs and pay taxes. We hope that a good business idea or project will not remain unrealized due to insufficient collateral when Finnvera’s financing can provide a solution.

We recommend making use of experts throughout the process. You do not have to do everything alone; it pays to benefit from the knowledge and experience of others. Create a thorough business plan and carefully prepared calculations. These will provide a solid foundation for getting started and moving forward. Good luck on your journey!

Päivi Kinnunen
Area Manager
Finnvera