Financing business assets

You are looking to invest in business assets, for example, a new machine, computers, or a delivery van. What are your options for obtaining funds? Check if the funds are available within your own business, or take out a loan to cover your expenses.

What are business assets?

Business assets are items you need to manufacture products or deliver services. For example, machines, vehicles, tools, and computers.

Finding funding

Many business assets are expensive to buy. There are 4 ways to get money to cover the cost of business assets:

  • Finding financial credit within your own business. For example, you should keep an eye on your inventory and adopt an active approach to debtor management and credit management. 
  • Savings costs through bootstrapping. This allows you to release or set aside funds for business assets.
  • Using subsidies and government schemes. Some investments come with certain tax benefits. For example, many investments are subject to the Small projects investment credit (kleinschaligheidsinvesteringsaftrek, KIA). You will receive an additional tax deduction if the business assets are energy-efficient or environmentally friendly. Find out if this is the case for your business assets.
  • External funding. There are various forms of financing suitable for investing in assets. Pay attention to the term of the financing. It should match the period in which you use the asset. Many assets will be used for more than 1 year, e.g. 5 years. A financing form with a long-term, such as a medium-term loan matches the best. You could use a short-term, for example, loan to cover your inventory. Business assets are part of the fixed assets; you have them in your possession for more than a year. Inventory is part of the current assets; you have them in your possession for less than a year.

Video Arranging funding

What steps should you take to get financing for your business? And where can you turn? The video explains.

Video: Financing your business

Financing forms

Family and friends

If you are asking family or friends to invest in your plans, it is a good idea to clearly set out the terms in writing.

Bank

You borrow an amount you need for your business and subsequently repay this in instalments over an established period. The amount you borrow includes fixed or variable interest.

Crowdfunding

Crowdfunding involves using a platform to raise funds from 'the crowd': people who are willing to invest in your business. Crowdfunding generally involves amounts of between €25,000 and €200,000, although higher amounts are becoming more common.

Microcredit and SME credit

Microcredits are business loans of a maximum of €50,000 for new and established business owners. SME credits are business loans of a minimum of €50,000 and a maximum of €250,000; they are intended for both new and established businesses. You can request both these types of loans from Qredits.

Leasing

Leasing involves paying for the use of business assets, such as cars, machines, or computers. Leasing is similar to renting. You pay an amount per month, rather than a lump sum. This way, you keep working capital available in your business. Find out what is the best option for you: leasing or buying business assets (in Dutch).

Business angels

Business angels are private or informal investors, many of whom are former business owners, who invest between €50,000 and €750,000 in your business. They will also provide you with business advice.

Credit union

Credit unions are cooperatives of businesses which provide financing and coaching services for amounts between €50,000 and €250,000.

Strategic partner

Strategic partners can be either a person or an organisation, such as a business angel or venture capital firm. In addition, key competitors, customers/clients, vendors/suppliers, and acquisition candidates can potentially also fund your plans.

Private-debt funds

Private-debt funds provide subordinated loans to SMEs. In order to be eligible, you are required to make a profit, generate sufficient cash flow, and not be able to turn to a bank for additional credit. The amounts involved are between €250,000 and €10 million.

NPEX and Nxchange SME exchanges

The NPEX is a stock exchange for SMEs seeking (growth) capital of between €1 million and €10 million. Nxchange is another stock exchange for SME owners that allows direct securities trading between businesses and investors. On Nxchange, your SME can also raise seed, innovation and growth capital by issuing its own shares or bonds via the blockchain. Financing starts at €200,000.

Venture Capital fund

Venture Capital funds are investment funds focused on high-risk investments in innovative and/or high-growth companies. Investments start at around €200,000, almost always in exchange for a percentage of shares.

Private-equity firms (participatiemaatschappijen)

Private-equity firms manage the assets of institutional investors and investment funds in a fund. These firms focus on larger SMEs, with amounts of between €1 million and €2 million.

Assistance for self-employed professionals

In the event of financial hardship, you can apply for income support and/or credit through Financial support for self-employed professionals (Bbz). The scheme provides loans to business owners who have been active for up to 1.5 years. More established businesses are also eligible to apply for loans.

Tips and warning

When submitting your loan application:

  • Make sure your administrative records are up to date, to ensure that a financier can quickly assess your application.
  • Convert the interest rate to an annual rate and determine whether it is acceptable. The SME Financing Foundation, Stichting MKB Financiering gives as a guideline for costs including interest a maximum of 20% per year. The Foundation has a quality mark for affiliated lenders (in Dutch) and financing advisers (in Dutch).
  • Compare offers from 3 lenders to be able to make an informed decision.
  • Read the small print in the loan proposal. In making your choice, look for a comprehensible contract, a quality mark and affiliation with an industry association. Lenders with a quality mark or who are affiliated with an industry association have to follow a code of conduct. This requires them to act transparently and clearly during the lending process.

Boost your chances

Use the finance flowchart to choose a form of financing in advance so as to find a suitable lender. Before submitting a loan application, check out the criteria that financiers look out for. Adjust your operations if necessary and discover what alternatives are available if you score lower on a specific criterion.

Support and preparation

Enlisting help will increase your odds of success, and with the right advisor and a good financial rationale, you will get your financing application approved in no time. These advisers will help you get started.