The range of business financing has expanded considerably in recent years. Entrepreneurs have more opportunities to get financing, but finding their way through a forest of options and providers is a challenge. Quality marks for financiers and advisors and the development of platforms can help make the market more accessible.
After the financial crisis, the business finance landscape has changed dramatically. In addition to the large banks that are traditionally important financiers, many new players entered the market. As a result, entrepreneurs have many more options to find financing than, say, ten years ago.
Missing the chance of financing and expansion
Nevertheless, the latest financing monitor by Statistics Netherlands shows that only 37 percent of companies with a financing need successfully apply. Among the entrepreneurs who do not, are those who opt for internal financing or who refrain from investing. There are also entrepreneurs who do not even investigate the possibilities. Whatever their reasons, it is certain that there are many entrepreneurs who miss opportunities for expansion, often because they do not know what is possible.
Quality marks make the market transparent
In order to make the market more accessible, the SME Financiering Foundation launched the Quality Mark Recognized MKB Financier in 2019. Financiers can obtain this quality mark if an audit shows that they meet a number of principles. For example, the audit looks at the maximum interest rates and whether a lender is transparent about commissions, but also whether a financier offers appropriate and responsible financing.
At the beginning of this year, the Keurmerk Erkend Financieringsadvies MKB was added. This quality mark was made possible in part by the Ministry of Economic Affairs and Climate. It should contribute to the further professionalization of the profession of financing advisor. Part of the quality mark is the Code of Conduct Recognized Financing Advice for SMEs. This includes agreements on transparency of rates and commissions, confidentiality and services.
There is a lot of support for these quality marks in the market. Of the participants in an online panel discussion during the Fyndoo Advisors Day, 67 percent said they find quality marks very important. “A quality mark helps us and lenders to be transparent about conditions and fees. I don't think you take the complexity out of the market, but it brings in a lot of transparency. I think that's the power of quality marks," said Andre Hendriksen of Financieringsgilde during the panel discussion.
Platforms: better match, more efficient process
Another important development in the corporate finance market is the emergence of platforms such as Fyndoo. Platforms make it much easier to compare providers and find a good match. This applies to entrepreneurs, but also to the adviser. Because there are many new players operating in niches and it is no longer possible to have an individual relationship with all parties, it can be difficult for advisors to find the best party. Platforms then offer a solution.
In addition, platforms make the process more efficient. They help to further digitize the application process. And if, for example, financiers do not want to finance certain sectors, they can be eliminated as an option at an early stage.
Entrepreneur needs an advisor
The function of platforms will be slightly different in the corporate finance market than in many consumer markets. Where Booking.com made intermediaries superfluous in the hotel market and Uber did that in the taxi market, platforms here mainly increase transparency.
This is because many financing applications are and remain complex, thinks Ronald Kleverlaan of the SME Financiering Foundation. “There are probably products that entrepreneurs can take out online themselves, but for more complex applications an entrepreneur will always want an advisor. The platform can then help to handle it faster and more efficiently.”
Hendriksen van Financieringsgilde sees it that way too. “It is not only a choice for provider A or B, but also a choice from all forms of financing. You can ask two entrepreneurs the same question and get the same answer, but still have a different outcome. I am not saying that the offline model will remain, but I do think that the entrepreneur needs a trusted advisor.”
Quality advisor and financier
An important condition is that consultants deliver real quality. For this it is important that they have sufficient experience and make enough flying hours. Financing advisor is not something to be added on the side, it is really a profession, says Hendriksen. To give entrepreneurs certainty about that quality, there is the quality mark.
Advisors who use a platform to look for the most suitable financier, the quality of which is also guaranteed by the financiers quality mark. That is the future for the corporate finance market. A future in which financing will be more accessible than now, which is ultimately good for the Dutch economy.
Did you miss the discussion or want to see it again? Check it out in the video below!