Entrepreneurs urgently need new sources of financing

Besides investments, entrepreneurs often just need extra financial space. Almost one in 5 entrepreneurs who say they need a loan or financing want to use it to refinance debt. In the hospitality sector, this is true for nearly half of the respondents. Working capital, starting a new business, and coping with poor operating results are also reasons for raising additional capital.

SME entrepreneurs seek financing twice as often as zzp'ers (self-employed people): 17% versus 9%. In general, the larger the company, the greater the financing need: among SMEs with 2 to 9 employees, one in 6 is looking for extra money. In companies with 10 or more employees it is one in 4.

Difficult

Three in five entrepreneurs in need of financing expect it to be difficult to get a loan or financing. Here again, the difference between SMEs and zzp'ers is large. SMEs in need of a loan are a lot more positive than zzp'ers. More than a third of them expect a suitable loan to be difficult to get, among the zzp'ers this is almost double.

They give several reasons for this. "Borrowing money from a bank is almost impossible, so you end up with investors", says one of the respondents, a retail entrepreneur. His business has been around for 5 years, he has 5 employees and is in the growth phase. Another, an entrepreneur in business services since 1996, 10 employees and also in the growth phase, adds: "Hardly anyone wants to finance an SME unless you pay 10% interest or more." A small entrepreneur says he also has a smaller network of investors and that banks do not take risk.

Almost half of entrepreneurs seeking financing nevertheless expect to go to the bank. For eenmanszaken (sole traders), the problem is bigger than for SMEs; banks are even less willing to take the risks there. As a result, these entrepreneurs are unintentionally 'kept small'. Banks say they have to protect entrepreneurs from debts they cannot repay, as well as being responsible with the savings entrusted to them. Sometimes, therefore, another form of financing is more obvious, they indicate.

Rodrique Engering, member of the Board of Directors of KVK: "As KVK, we truly understand the frustration of entrepreneurs. On the other hand, we also understand the position of the banks, they have their own risk assessment to make."

Family and friends

Investors, a donation system through family and friends, crowdfunding, or factoring are mentioned as fallback options for financing. The latter involves a so-called factoring company taking over your invoice, paying it directly to you, and sometimes also taking over debtor management for a fee. One in 5 entrepreneurs expect to turn to family, friends, and acquaintances, and also one in 5 to a leasing or factoring company. Self-employed entrepreneurs are more likely than SMEs to expect to ask family, friends, or acquaintances (25% versus 13%) or to use crowdfunding (9% versus 2%).

Only one in 8 entrepreneurs think it will be relatively easy to get a loan. One entrepreneur says: "Our company is healthy and meets all the repayment obligations. Refinancing will not be a problem at all. There is currently only a loan for real estate." Another: "Easy, but relatively expensive."

Financing Guide

On the need for new sources of financing for entrepreneurs, Engering says: "We see the market dynamics and are trying to address them together with banks and other organisations. Dutch SMEs account for two-thirds of added value and three-quarters of employment in the Dutch economy. For them as well as for ambitious zzp'ers, finding the right financing is crucial. That is why the Financing Guide was launched recently. It is aimed at entrepreneurs seeking financing of up to one million euro. The online tool helps entrepreneurs find the best option with targeted questions. It gives easier and faster access to financing and, as a result, entrepreneurs can invest earlier and better in growth, but also in innovations and sustainability. So, highly recommended!"

The Financing Guide is a collaboration of KVK, the Dutch Ministry of Economic Affairs, the Dutch Banking Association (NVB), Stichting MKB Financiering (SME Financing Foundation, SMF), and the Netherlands Enterprise Agency (RVO). 

Read the (Dutch only) KVK research report Ondernemen in 2024