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Pentikäinen: businesses need alternative funding options – Suomen Yrittäjät cooperates with Fundu

“We cooperate with banks on business financing. The bank typically funds the secured portion, say, €700,000 of a €1 million loan, and Fundu takes care of the rest,” says Lasse Vuola, CEO of finance platform Fundu.

COMMERCIAL COOPERATION

Suomen Yrittäjät and the Finnish finance platform Fundu signed a cooperation agreement on Monday. Fundu offers Finnish limited liability companies unsecured business finance, as well as loan packages in which a bank is the main lender and Fundu is a complementary one.

Fundu uses both banks and crowd-funding to secure finance for businesses. The company has about 10,000 private investors, most of whom are current or former entrepreneurs.

“Businesses need alternative funding options as bank regulation has tightened and banks are often difficult to get finance from. Through cooperation with Fundu, a Finnish and entrepreneur-led company, we aim to offer another good alternative,” says Suomen Yrittäjät CEO and President Mikael Pentikäinen.

“There is encouraging experience of similar cooperation between the financial sector and SME organizations from around the world. That’s why we want to serve our members in this way too,” Pentikäinen says.

Suomen Yrittäjät is also concerned that more and more entrepreneurs turning to payday lenders. Pentikäinen says that is why new alternatives are needed for cases in which businesses cannot get a bank loan for the total sum they would like.

“We wanted to choose a Finnish provider. I’d encourage business owners to take advantage of the Fundu financing option. We’d also like to hear users’ feedback,” Mikael Pentikäinen says.

Fundu: “We operate responsibly and for the long term”

“We operate responsibly and for the long term, completely transparently, and with no hidden fees. Depending on the risk, Fundu’s interest rates range from 6% to 15%, averaging at about 10%,” Fundu CEO and founding shareholder Lasse Vuola says.

“If a bank lends €700,000 and Fundu €300,000 of a €1 million loan, the finance package has a total interest rate of 5–7%,” Lasse Vuola says.

Suomen Yrittäjät members get 50% off arrangement fees for loans organized via Fundu. This is equivalent to €250–€750, depending on the size of the loan.

The credit risks of lending are analysed using a neural network model. The Fundu algorithm determines bankruptcy risk, for example. The algorithm means that loans are only available to limited liability companies, as the same data for analysis are not available on partnerships.

Fundu grants business loans of between €25,000 and €5 million. The largest loan granted to date is €3 million.

Entrepreneur-led funding platform

Fundu is mostly owned by its founders. The insurer LähiTapiola owns 20% of the company and Fundu cooperates with almost all major banks.

“Where bank funding ends, Fundu steps in. If a business owner does not have enough collateral for a loan, we can help. If a business owner gets all the funding they’d like from a bank, then Fundu isn’t needed,” says CEO Lasse Vuola.

Fundu acquires loan capital through crowd-funding. If a company’s loan application to Fundu is approved, the company loan is opened as an investment object in the Fundu service. The company receives the money in its account when the loan goal has been reached.

“Business owners are also welcome to join us as investors. We have an average target return of 7%,” Lasse Vuola says.

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Jari Lammassaari