Financing your start
During the initial period before sales have started, you may need a start-up capital to cover various costs. For example, the purchase of materials and equipment, marketing or rent. The start-up capital gives you an opportunity to get started before the income starts coming in.
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In the first instance, it is the owner of the business who must bear the financial risk by investing their own funds. The size of your own investment is often crucial.
Own funds
It may take some time for you to receive income from your business, while the bills continue to come in as usual. That is why it is important to be able to get through the initial period with little or no income. You can do this by using saved capital, getting an extra job or staying in your old job while you start your business, perhaps part-time.
Start-up grant
If you are a jobseeker and have what it takes to run a company you may be eligible for a start-up grant from the Swedish Public Employment Service (Arbetsförmedlingen) to start a business. The support is provided for six months.
Enterprise start-up support is for those who want to start up a business, alone or together with others. The prerequisite for receiving the support is that your business concept has the potential to be profitable and will provide you with a long-term income. You cannot be granted the support if the business you are going to run is in an industry where it is difficult for employers to find skilled workers.
Forms of financing
If you cannot finance the start-up with your own money, you will need to turn to a financier. The forms and conditions of financing vary, but can generally be divided into
- bank loans
- venture capital
- business angels
- public funding
- crowdfunding
Podcast: Forms of financing
Bank loan, venture capital or grant? Listen to a podcast on financing forms.
Podcast on forms of financing at Venture Cup (length: 24:56 minutes) (in Swedish)
Calculate your capital needs
Try to get an idea of how much money you will need in start-up capital for your business and your running costs to run the business over a six-month period. At the same time, you need to factor in your personal costs so that you have money left over to live on.
Consider the consequences
When choosing a particular type of financing for your business, whether internal or external, you should consider the different alternatives and their implications for your business.
If you choose to raise external capital, it may mean that your own say in the company and its operations is reduced. All loans must be paid back and pledging security to the lender always means taking a risk with the company's or your personal finances.
Also, do not underestimate the time and effort it takes to raise external capital. Financiers often place very high demands on your application and the reporting of how the money has been spent.
Deductions for investments
People who invest capital in limited companies and economic associations have the possibility of making what is known as an investor deduction of half the amount invested, up to a maximum of SEK 650,000.
Investor deductions on the Swedish Tax Agency's website (in Swedish)