As a self-employed person, you may need credit at different times.
- At the start of your business, you may need starting capital for the purchase of material, a car, IT equipment …
- As your business grows and opportunities arise, you may want to invest more in the future of your business.
- Sometimes it may also happen that you have a financial setback and that you have to bridge a difficult period.
Financial Wisdom For Entrepreneurs
Borrow from the bank
In addition to a founding capital, which you need to set up a certain legal form such as a private limited company or a company, you can borrow an amount from the bank that you use as starting capital, for example, to buy material with. The banks have different credit formulas for starting entrepreneurs.
To be eligible for a loan, most banks ask you to submit a detailed business plan. You will also need a certain amount of own resources that you can invest in your business. You can also apply for loans even through guarantors.
Help from family, friends or acquaintances
If you do not have sufficient resources of your own to get a loan, you may be able to appeal to family, friends or acquaintances. Maybe you can involve people from your area, the so-called ‘Family, Friends & Fools’, in your project. This can be done, for example, by making them a co-shareholder: in this way, they become the co-owner of your company and contribute to their own capital contribution.
Another possibility is that they lend you an amount, which increases your own capital contribution. The government stimulates such loans and gives them a tax reduction through the ‘Win-win loan’ system.
The bank may not give you a loan because the risk is too high and there are not enough guarantees. This is possible, for example, if you start with a highly innovative or risky company.
In such a case, you can look for venture capital. The brochure “You are looking for venture capital?” from the Agency for Innovation and Entrepreneurship gives you an overview of the risk capital offer in Flanders.
You can also turn to the government for help. This assistance can take the form of capital participation (shares), a guarantee or a loan.
Help from the government
The government helps starting entrepreneurs with subsidies and support measures. You can find an overview of all subsidies and support measures in the Grant Database of the Agency for Innovation and Entrepreneurship. Through the SME portfolio, the Flemish government offers support to small and medium-sized companies that want to invest in training, advice, knowledge and international business.
The government also offers support by offering affordable loans. As such, it is easier for entrepreneurs to obtain other financings with such cheap loans.
There are also municipalities and cities that try to promote entrepreneurship with subsidies. It is worth checking whether your municipality does that too.