Unfortunately, after the word “investment,” a large share of valuable ideas and projects dies a natural death. This sad trend is usually caused by a lack of funds to expand existing business areas or create new ones with growth potential. The world of entrepreneurship is built on money—and small, developing companies often lack it. As usual in such situations, the only solution may be a loan.
Borrowing—but from whom?
It might seem that obtaining a loan nowadays is no difficult task. Offers from all kinds of commercial banks are multiplying rapidly. Unfortunately, not every business owner can demonstrate a credit history satisfactory to a bank. And when the prospects of obtaining funds disappear, opportunities for profitable projects naturally disappear as well. Fortunately, commercial banks are no longer the only institutions operating in the financial sector. When the possibility of using their services has been exhausted, help can be sought from so-called loan funds.
An alternative to commercial loans
Generally speaking, a loan fund is a capital-support instrument—not a bank—primarily intended to provide loans to small and medium-sized enterprises. In particular, it serves those with severely limited opportunities to obtain external capital. Loan funds are chiefly aimed at emerging and developing businesses that, due to a lack of credit history or the necessary collateral, cannot count on obtaining funds from more traditional sources. An entrepreneur may apply for a loan from a fund if they conduct their primary business activity in the area served by that fund and repay their obligations to the Tax Office on time. They must also clearly define the goals and strategy for which the funds are to be used. And although such an institution is not a bank, its services should not be sharply distinguished from strictly banking services. In essence, obtaining funds this way is simply business loans.
The fund—a reliable partner
The word “bank” is always associated with credibility and reliable service. Are loan funds equally solid partners? Definitely. They operate under the Commercial Companies Code and civil law. Most of these institutions’ capital consists of public funds, often obtained from the European Union. Consequently, they are subject to constant oversight by public authorities and European committees. A significant number of them also operate within the National Services System. The reliability of the services provided by loan funds is the same as that of banks—with the difference that they operate in a market niche for business owners who cannot use commercial offers.
Is it worth considering loans provided by loan funds? This is a highly individual matter—for some, however, it may be the proverbial “last resort.”