Funding for internationalisation
Internationalisation requires your business to make a long term and systematic financial investment. You can obtain external financing for your company’s internationalisation programme from sources in both the public and private sector.
Applications for financing for internationalisation may come from companies that either want to expand their business activities or develop their existing international operations.
There are several public financing programmes for companies of various sizes and ages and for companies in different sectors. The stage your company is at in internationalisation and the international field of activity will also affect what sort of financing you may apply for and where to apply. Make use of the help provided by the Team Finland network, for example, when choosing a financing programme.
If you are asking for public funding, your company will need to contribute its own share (20-50% in many cases) and often too another finance provider (e.g. a bank) will need to be involved. In addition, each finance provider will have its own, particular requirements, which your company will have to meet.
Almost without exception, obtaining private funding will mean that your company’s balance sheet and collateral will have to be in good shape.
You may obtain public and/or private financing for many different types of activity on different scales related to your company’s internationalisation strategy.
Financing may also be granted, for example,
- for preparations for, and the testing of, internationalisation (Business Finland and Nopef)
- international business and its development (ELY Centres)
- exports (Finnvera)
- investment (Finnfund, Finnvera)
- restructuring (Finnvera)
- project planning (Finnpartnership)
- improved innovation processes and management (Business Finland), and
- international fair projects (Business Finland).
Familiarise yourself more with the kind of funding provided by the Team Finland organisations and the terms and conditions these providers specify. These may relate to the age of the company, its size or field of activity.
For your company’s internationalisation activities, the following may be available: a grant, a loan, guarantees, venture capital funding and export-credit guarantees. The sums can vary from thousands of euros to more than a million.
Grants are mainly intended for preparations for internationalisation, such as research, development and innovation projects. They do not have to be repaid.
Loans are usually for practical aspects of internationalisation. They have to be repaid with interest.
Guarantees may be applied for as a security against loans. They make it easier to obtain funding when your company’s collateral would otherwise not be sufficient to obtain the funding. There is generally a charge for guarantees.
Venture capital funding is provided by a private equity fund or by other investors. They can help your company to obtain capital, business expertise and networks to aid internationalisation.
You can use export credit guarantees to protect your company against the credit risks related to export trade. You can also take advantage of export credit guarantees to organise export financing.
You can apply to the Team Finland organisations, such as Finnvera, for public financing.
Grants are available through such organisations as the ELY Centres and Business Finland. Loans are granted by Business Finland and Finnvera, for example. Guarantees as security against loans are available from Finnvera, for example. Venture capital funding is available from Tesi, for example. Export-credit guarantees are provided by Finnvera, for example.
In addition, the European Union provides loans, microfinance, guarantees and venture capital for all types of enterprises regardless of size and sector. You may apply via the ELY Centres and financial institutions, for example, for these.
You may also apply for private funding for your company’s internationalisation activities, for example, to banks, financial companies, investment banks and private investors.
The type and form of funding determine whether you may use more than one source of financing for the same project.
Public funding generally only covers part of the costs of an internationalisation project, so you will have to use your company’s assets to make your own contribution to finances or use funds from private investors, such as banks. Public sources of financing cannot be combined so that costs are financed entirely from public funds.
If the public financing you obtain (from Finnvera, for example) is in the form of a loan or guarantee for a bank loan, however, you may combine it with a grant you receive from a public source of funding.
Make sure that the maximum amount allowed for de minimis financing is not exceeded in the current or previous two years. De minimis aid may not exceed EUR 200,000.
The tax treatment for financing is often on a case-by-case basis and depends very much on the form of financing. For example, grants are generally taxable income, while loans are not. Check the case-by-case taxation practices for financing with the Finnish Tax Administration or a financing provider.
The financing your company receives should be included in the profit and loss account and/or the balance sheet. With respect to the costs of a project incurred, in general, and together with the final report, an auditor’s report should be provided confirming whether or not the funding has been used in accordance with its terms and conditions.