What are Lån Til Bedrift and are They Worth it?


Running a business isn’t always easy.  We face all sorts of trials and tribulations along the way.  Obviously, one of the biggest “pain points” for entrepreneurs both here in Norway and across the globe is simple: money.  How can we make enough money to start earning a profit?

While it was important to keep everyone protected, the covid 19 pandemic did unfortunately lead to a slump for many of us, whether we’re a small local business or a bigger operation.  As we make definitive efforts to recuperate, it’s hard to deny that it’s been slow going in many instances.  

All of this points to the fact that often, both now and throughout the past several decades, business loans are something that we can depend on and rely on to a certain extent.  Although some folks may balk at the very idea that we should become “dependent” on loans, there’s a lot more to the story here than just that.

If you’d like to learn more about what business loans are, how they work, and why we may want to look into them, then you’ve come to the right place.  Today, we’ll be covering a lot of those details and more, so do be sure to stick around!  Remember, they aren’t only useful to pre-existing businesses, but also to startups in some capacities.

What are Business Loans?

Starting out with the basic stuff, let’s explore what business loans are and how they work.  They’re pretty easy to understand, thankfully.  They’re a type of credit agreement that qualifying businesses can get to help them in the start up or growth phases, as well as in certain other circumstances when needed.

Typically, they’re granted by banks, credit unions, online lenders, or any other type of eligible financial institution.  Examples of that can be found here: www.forbrukslån.no/bedriftslån/, if you’re curious to learn more about the details there.  More often than not, they’re used for things such as purchasing more equipment or replacing outdated machines or even more products and real estate.

How Do They Work?

From here, let’s delve into how the process actually works.  Of course, it will likely vary somewhat depending on what lender you’re working with as well as where you live.  Here in Norway, things may be different from other countries, so take that into account when you’re choosing a lender.

There are two things that your lender will be most interested in as far as whether or not you qualify.  The first is your overall capacity to take on more debt and to manage the debt that you already have, and the second is whether or not you can offer anything as collateral in the case of failed repayments.

Now, there’s a lot to unpack just in those two assertions.  When you’re applying for a loan as an individual, it’s your credit score that matters.  You can think of the first point above as the equivalent to this, just on a larger scale because it will depend on the history of your entire business.

The collateral bit can be a bit more complicated.  Many lenders will be willing to work with you if you aren’t sure what it is that you have to offer up.  Just be sure that you can make your repayments before you agree to put something precious as your collateral.  Additionally, there are plenty of creditors who do offer unsecured business loans.

The Application Process

Applying for business loans is more complicated than applying for a personal one, and there are several factors that lead to that assertion.  Namely, there’s the fact that you will have to demonstrate a solid plan of action for the project that the money is being used for.  While this isn’t overly daunting for big companies or ones that are already established, it can be stressful for start-ups and companies that are still growing.

You’ll want to keep that in mind as you begin to sort out application details.  If you’re a startup, then there are a few extra details to include in this paperwork – and you’ll probably get more questions from the lender as well.  Explain how the loan would help you to build up your company and then help it grow in the future.

Your project plans should be laid out as plainly as possible in these circumstances.  Do your best to include even the smallest of details, since everything you provide can potentially increase your chances of approval.  This goes for any time that you’re applying for one, for the record, not just if you’re a startup.

There are a few other things to keep in mind that are specific to Norway.  For one thing, there are usually limits on how much you can borrow without collateral.  Here, it’s usually a 500,000 NOK limit for unsecured loans, and you’ll be expected to pay that back within a five-year period.  For larger amounts, you will likely have to go with a secure option.

Improving Your Approval Odds

With all of this said, you may be wondering how you can go about boosting your approval odds, beyond what we’ve already discussed.  There are a few options here.  For one thing, you’ll probably want to boost your overall debt servicing capacity, since that’s one of the things that lenders prioritize when they examine an application.

You’ll probably want to consider paying close attention to your current cash flows, both in and out of the business.  This will help demonstrate your reliability over periods of time, especially if you weren’t certain about how to do so otherwise.  Something to think about here is that if you only have a small customer base, it could be a bit trickier to manage in the sense that you’re more vulnerable to external issues.

Another strategy you could employ is to get what’s known as an overdraft facility, because these can help protect you from unnecessary expenses.  Essentially, it links whatever payment options you want to a corporate account to serve as a way to better pay your suppliers.  Ask your bank about it if you aren’t certain.

Loan Agents

For those of us out there who are concerned about finding loans that our businesses are eligible for, there are ways that we can get help with this.  One of the more streamlined options is to find a loan agent, which you may or may not have heard of before.  Usually, they are another company, but their services are free for borrowers.

Most of the time, these loan agents have a lot of connections already and are there to assist you to find a lender that will work with you.  Ask about things like interest rates and how to find the best deals.  There’s a good chance that they’ll be able to connect you with a lender that suits your needs.

What Can We Use Business Loans For?

Obviously, the process of applying for and obtaining a business loan is a bit of a tricky one.  That said, it does make us wonder what we can actually use these funds for!  While you should have a firm grasp on your plan for the money before you submit an application, we’d like to provide some inspiration if you’re feeling stuck.

Startup costs are probably one of the biggest ways that folks use their business loans.  After all, there are a lot of expenses involved with getting an organization off the ground and running, so getting the support to fund that is a big deal.  What else is there, though?

If you’re looking to expand your operation and want to get some extra land and real estate, then these types of credit agreements may be an option for you.  They can also help with purchasing more inventory if you get a large influx of orders or if you need to buy machinery (or get replacements).  

The other big reason to get one is if you’re refinancing.  Now, this delves into somewhat tricky territory, so we’d recommend speaking to your accountants or financial advisors before doing so.  Still, it’s a viable option in those cases.

Are Business Loans Worth it?

For our final topic, let’s discuss whether or not these sorts of credit agreements are worth it.  What you have to remember is that they still come with interest rates, and you’ll still be expected to make your repayments on time.  Some lenders even require that payments be made on a daily basis, which can be difficult to contend with.

The maximum interest rate on these loans here in Norway is twenty percent, but let’s face it, that’s still pretty high.  A loan could end up costing you a lot more than you initially borrowed, which is a problem that all consumers face with them as well.  With that said, that’s not to say that they’re not worthwhile.

If you aren’t really sure whether or not you should apply for one for your business, that’s when it’s time to talk to financial experts to see what their opinions on the matter are.  Admittedly, this can feel daunting, but don’t be afraid to talk to them.  This is what they’re here for!

At the end of the day, it’s up to each organization to decide if they should use loans to help finance big expenses or not.  There’s a good reason that most companies do end up doing so, as we saw in the past few years.  However, the prospect of high repayment amounts, large interest rates, and a tight schedule can make some business owners rethink their plans.