In Europe and The Netherlands a microcredit does not just refer to a small loan for people starting businesses in economically less developed countries. It also refers to (smaller) loans to entrepreneurs like yourself.
Organisations and programs in support of (micro)credits for European SMEs were mostly set up over the last decade in support of financial inclusion. They aim to fill the gap left by banks that found small companies too risky to invest in, and are therefore usually backed by public funding and guarantees as well as private.
According to a EU-survey over 150 microcredit-lenders have been set up in different EU-countries nowadays, mostly NGOs and foundations. Within the definition of the European Commission, a microcredit is a loan below 25.000 euro – for setting up or developing a small business.
An organisation called Qredits was set up in 2008 for this reason in The Netherlands. Co-founded and funded by the Ministry of Economic Affairs and backed by several Dutch banks and insurers. The EU also provides guarantees, under the so-called EaSI microfinance and COSME programs. Entrepreneurs in the Netherlands have the option to apply for several kinds of loans, being a microcredit, a so-called SME credit (Dutch: MKB-krediet) and credits for commercial mortgages and working capital, a so-called flexible credit. Qredits also offers support and coaching when applying for these loans. (The information on the English website is unfortunately limited however).
Microcredit (Dutch: Microkrediet)
A microcredit of Qredits refers to a loan up to 50.000 euro (so more than the EU definition). These are available for startups and SMEs (founder must be over 18) with a maximum of five employees, doing business in The Netherlands. You also need an extensive business plan if you want to apply. Microcredits, with maturities between one and ten years, are payed off through a monthly fee including interest. Qredits names a rate of 9,75 percent per year (+1 percent if a higher risk is identified) (but no rights can be derived from this figure). The rate is fixed throughout the term of the loan and faster repayment is penalty-free. Qredits also calculates some administrative costs, depending on the height of the loan (max. 750 euro). Please note that this is only general information, more can be found in the terms & conditions (Dutch) or by contacting Qredits.
SME credit (Dutch: MKB-krediet)
Above this amount and up to 250.000 euro, a so-called SME credit (Dutch: MKB-krediet) is an option, available for startups and SMEs (founder over 18). Companies have to do business in the Netherlands. Loans you might have at the bank may not exceed 250.000 euro. Your credit needs shouldn’t rise above this amount either. You also need a business plan and a forecast of your revenue. SME credits, with maturities between one and ten years, are payed off through a monthly fee including interest rates from 8.75 percent, depending on the sort of loan and company. If you wish to repay earlier then agreed upon, you might face a penalty. This is only free of charge in certain cases. Qredits charges administrative costs of 1.5 percent of the total loan, with a maximum of 2500 euro. More can be found in the terms & conditions (Dutch) or by contacting Qredits.
Mortgage credit The requirements for a SME credit also apply for a so-called mortgage loan, that may be used for the procurement of an office, shop or storage space. This loan, with maturities between one and twenty years, can be payed off through a monthly fee including interest. Rates start from 7.75 percent, depending on the risks and object, and are fixed for the first ten years. Actual rates however depend on developments in the market, Qredits notes. Quicker repayment is only penalty-free under certain circumstances. (see the terms & conditions in Dutch)
This kind of loan is only available if you already have access to one of the loans mentioned above and offers a maximum of 25.000 euro of extra credit. Interest is only payed over the amount that is used (1 percent per month, plus 0.25 percent of the chosen total amount per quarter).
Next to Qredits, backed by the Dutch government, the government itself has several loans available for SMEs. The Netherlands Enterprise Agency (RVO) offers an overview of certain options in English, (including subsidies, which will be discussed in a different post) the complete list unfortunately is only in Dutch however. We will discuss the most relevant (general) options.
The Ministry of Economic Affairs aims to support technologically innovative and fast growing SMEs with this credit, “in a phase were knowledge becomes an actual product”. Funds come from the Innovatiefonds MKB+ (Dutch) and are set at 70 million euro for 2016 (and a maximum of 10 million euro per request). One of the main requirements of this fund involve “giving back” the funding when the company turns into a success in order to reinvest in new startups. Deposits are granted following a milestone planning, small companies are allowed to cover 45 percent of their developing costs with this instrument. You can apply here, but you need someone that speaks Dutch, as the information in English is (again) poor unfortunately.
Need to do research for a proof of concept? The Proof-of-Concept Funding for SMEs might help – a loan including interest at a rate of 5.22 percent, (as of 1 July 2015) and based on the EU-reference percentage. The total budget of this fund is 9.5 million euro.
Pledges & Tax benefits
Entrepreneurs also have the possibility to get a pledge (link in Dutch) from the government on a (commercial) loan under the so-called Borgstelling MKB Kredieten (BMKB). Here the government may back you when trying for a bank loan, but you do not yet have enough deposit. The government pledges 67,5 percent of a maximum loan of 266.667 euro, RVO states and generally applies for six years. Repayment starts six months after the signing of the agreement.
The Dutch government also offers several tax benefits to (starting) companies. We will leave this for another post! Also, if you feel somethings missing – let us know via [email protected]