Every aspiring entrepreneur faces the problem of raising funds to start and run their own business. There are several ways to get funds to set up a company, one of them is low – interest loans.
What are low-interest loans?
Beginner entrepreneurs often have a problem with earning funds for business development from banks that do not want to grant loans to people whose business project involves high risk. Banks also do not grant loans to persons who do not have any credit history. However, young entrepreneurs can seek help, which supports business projects that have no chance of financing from other sources.
The program is targeted at micro and small enterprises. Under this program, owners of micro and small businesses can obtain low-interest loans , which will definitely contribute to the development of their enterprise. The owners of companies that can apply for the program:
- employ up to 250 people;
- they have a total balance sheet of up to USD 43 million and their annual turnover is up to USD 50 million;
- not having any credit history;
- are based in the province in which the program operates;
- they do not have sufficient funds to implement the project;
- not having sufficient collateral;
A loan under the program must be allocated primarily to fixed assets, modernization and computerization in a given enterprise.
Under the program, contracts were signed with loan brokers in each province. Intermediaries in the program are to determine the chance for the entrepreneur to repay the loan and the reality of investment plans in the company.
From 2017, under the program, an entrepreneur can get a loan:
- a micro loan that does not exceed 100,000 USD – loan period up to 5 years
- development up to 500,000 USD – loan period up to 7 years
How does the EU funds loan look like?
The grant of low interest loans takes place in several stages. The first is to receive money , which part of the funds received should be allocated to subsidies for small enterprises. Usually, however, trust funds are established that cooperate with financial intermediaries. If a business owner wants to take advantage of a low interest loan , he must go to such a financial intermediary (foundation, regional agency or designated bank). The last stage is the submission by the owner of the relevant documents on the basis of which he will receive a loan, which he must repay within the specified time in the contract. The loan returned by the entrepreneur goes back to the fund and is intended as support for further companies.
Low-interest loans under the program are often the only salvation for micro and small businesses that should be modernized, but their owners do not have adequate credit collateral.