Business start-ups bring light to recession tunnel

Number of applicants for start-up grants is increasing

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The number of new entrepreneurs applying for grants for business start-ups from the Employment and Economic Development Office has been higher than a year ago, regardless of the fact that the financial situation has remained unstable.
     
The Ministry of Employment and the Economy reports that over the first three months of the current year, more than 3,000 decisions were made to provide grants for business start-ups. Compared with last year, the figure shows an increase of some 150 start-ups.
      ”Starting up a business is a good form of employment, and at present, there seems to be solid faith in entrepreneurship”, notes Natalia Härkin, an official at the Ministry of Employment and the Economy.
     
The picking up of economic activities has been noticed even in the lending sector.
      ”The demand for financing start-up enterprises has been growing. Last year we provided financing for 3,500 start-ups, but in the current year the pace seems to be around 4,000 start-ups”, reports Executive Vice President Veijo Ojala from Finnvera, a specialised financing company owned by the State of Finland.
      Finnvera provides its clients with loans, guarantees, venture capital investments, and export credit guarantees.
      Ojala estimates that entrepreneurship is a normal phenomenon after an economic decline. He says that people choose to be entrepreneurs rather than be faced with unemployment.
      ”The financing of business start-ups has been the only growing segment in our lending. In the other segments the demand for financing has so far been scant”, notes Ojala.
     
Still last year it was difficult to start up a business, as the grants ran out in some parts of Finland already at the end of the summer. At present, the ministry asserts that the financial aid will be sufficient.
      ”We have allocated approximately EUR 47 million to start-up grants. So far, a total of about EUR 27 million has been spent”, Härkin reports.
      According to the ministry, a total of EUR 36 million was used for start-up grants in 2009. Härkin believes that this time the appropriation should be sufficient to cover the entire year.
      ”The situation is good, as we have received no messages from any parts of Finland complaining that the funds are insufficient. If you are interested in starting up a business, the availability of grants should not be any obstacle”, Härkin says encouragingly.
     
During the recession, the granting of business start-ups has been fluctuating sharply. In 2008, a total of 8,550 persons set up enterprises of their own after having been granted start-ups. In 2009, the number of new entrepreneurs dropped to 7,200.
      According to Härkin, it appears that the pace has accelerated and the number of start-up decisions is higher than last year.
     
According to Finnvera’s Ojala, particularly the number of new businesses seeking global growth has increased this spring.
      In 2009, Finnvera’s subsidiary Veraventure secured financing for 200 innovative start-up enterprises. Ojala believes that this year the number of such start-ups will will rise to 250.
      ”The flow is naturally smaller than in other start-ups as these enterprises that are seeking global growth are of higher quality. One cannot speak about any growth boom, but a certain level of recovery has been evident”, Ojala explains.
      Even though the number of start-ups has been higher than before, the demand for financing at other enterprises has been bleak. According to Ojala, companies are not willing to invest yet, as the economic outlook is still uncertain.
     
Ojala believes that the demand for financing will grow when exports pick up and investments get started at full capacity.
      ”Plenty of financial options are available, as the state has secured our financing potential. When it comes to the regular banking services in Finland, it could still be difficult to get financing for starting up a new enterprise”, Ojala estimates.


Previously in HS International Edition:
  New companies set up at brisk pace (29.1.2009)

Links:
  Employment and Economic Development Office
  Finnvera

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