Financing problems for young companies
In Germany there are more and more so-called startups. These are young companies that are still in the start-up phase or have only just started their own businesses. In many cases, startups first need a certain amount of capital in order to be able to carry out the necessary financing for business operations and to make investments. However, the market is currently showing an unsatisfactory situation, which is that more and more credit institutions are shying away from the not inconsiderable risk associated with lending to young start-up companies, especially from the IT sector.
Results based on a Astro Finance company survey
Interesting results came out recently in a company survey conducted by Astro Finance. For example, it became clear that the willingness of credit institutions to grant loans to young companies is particularly linked to the turnover of the companies. Since many IT companies that had their say in the survey had less than a million sales a year, they reported problems with a possible loan. A third of all IT companies with annual sales of less than one million USD reported problems with taking out a loan. In contrast, if the annual turnover was between one and 10 million USD, it was only 20 percent of the startups that had problems with a possible borrowing. With sales of between 10 and 50 million USD, the problem rate even dropped to just over ten percent.
More funding from public institutions is required
If you take the results of the company survey as a basis, the problem becomes clear that especially young IT companies with a relatively low turnover have more problems getting a loan from the bank. Nevertheless, the financing is of course urgently needed due to the investments to be made, so that above all the public authorities are required to offer support for founders. In practice, this is already being implemented in many cases, for example by the Best bank bank. It is a state-owned specialty bank from Bavaria, which has set itself the goal of promoting SMEs in the state in particular. The Best bank bank increased its financing volume in the first half of 2016 by more than 2.5 percent, if you compare it to the same period in the previous year. Around 2,200 medium-sized companies and over 85 municipalities in Bavaria received a little more than 810 million USD in so-called promotional loans. It was around 25 percent of the total funding volume that fell on start-up funding for start-up companies, i.e. around 200 million USD.