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Access to finance

20 October 2009
by Ina Dimireva -- last modified 02 June 2012

An overview of the finance programmes for small and medium businesses in Denmark.


Public finance

Public finance is provided through national schemes in the form of:

  • grants;
  • loans;
  • guarantees;
  • sureties;
  • share capital.

The "Finance Guide" portal provides an overview of the various schemes and projects on offer. These include national grant options, Nordic schemes, EU schemes, private loan offers and offers of venture capital.

Start-up companies can take advantage of the public consultancy services on offer: regional incubation units, the "Startvaekst" Internet portal and the growth fund.

Growth Fund

Indirect support

Equity is risk capital, i.e. investors are willing to risk a loss. However, they also expect a return on their investment.

Mezzanine financing is a loan that is subordinate to traditional loan financing, but superordinate to equity. As a general rule of thumb, mezzanine financing is suitable for development projects with a moderate risk profile. At the same time, the project must be precisely mapped out, so that the loan criteria in the agreement are clear.

Direct support

The Growth Fund is a national investment fund that offers a raft of financing solutions, from equity to loans and sureties.

The Growth Fund can usually finance up to approx. 50% of a given activity. It has a broad range of financial products suited to different purposes. Of these, the 'Get Started' loan is the most widely used.

Growth Fund

Innovation Environments offer development capital to scientific start-up companies. They can help by obtaining capital, e.g. via the Growth Fund, venture companies or private investors.

Innovation Environments

Innovation consortia are collaborative projects between businesses, research bodies and technological service centres. The Danish Agency for Science, Technology and Innovation provides grants to finance these.

Danish Council for Technology and Innovation

Innovation consortia

The Danish National Advanced Technology Foundation develops and invests venture capital in high-tech projects. The financing ratio is 1:2:3, where one-sixth comes from the public-sector party, one-third comes from the private party and half comes from the Danish National Advanced Technology Foundation. For small and medium-sized enterprises, however, up to 60% of their costs can be supported.

Danish National Advanced Technology Foundation

The Energy Technology Development and Demonstration Programme (EUDP) works in the area of developing energy technology, supporting things such as the use of energy in utility security and cost efficiency while developing business potential in industry. Grants for developing energy technologies are available. You can apply for grants for projects aimed at developing and demonstrating energy technology.

Energy Technology Development and Demonstration Programme (EUDP)

Tax reductions

When you set up a business, there are often a number of start-up costs. Many of these costs can trigger reductions in both tax and VAT accounts. Such costs include lawyers, auditors, market research, wages and advertising.

Tax reductions for businesses

Access to EU funding

In the period up to 2013, the EU Structural Funds are designed to help strengthen regional competitiveness and employment throughout Denmark. Grants will be awarded to projects, including private companies, to strengthen regional competitiveness and employment in Denmark.

Danish Enterprise and Construction Authority information on regional development

Private finance

Private funding is offered by:

  • banks;
  • mortgage institutions;
  • leasing companies;
  • factoring companies;
  • a number of private investors such as venture companies and Business Angels.

Private advisory options:

  • Industry association for investors in Denmark (Danish Venture Capital and Private Equity Association)
  • CONNECT Denmark is an independent, private not-for-profit organisation. It is an association that provides free advice and mentoring for start-up entrepreneurs and small businesses with great potential for growth, through its network of Denmark's best companies, most diligent businesspeople and outstanding research and innovation environments.

Industry association for investors in Denmark

Connect Denmark

Bank loans and mortgages

Unlike business credit, bank loans and mortgages are set aside financing where the entire loan is paid out as a lump sum. You repay the loan over an agreed time. No specific requirements as regards sector, size of business, etc. are required for obtaining one.

Mortgages may supplement a bank loan or other types of funding.

Mortgage institutions evaluate each application individually. It is possible to borrow up to 60% of the mortgage institution's valuation of a property. The size of the loan depends on the credit rating of the business, i.e. its ability and willingness to repay the loan.

Mortgage institutions traditionally base the credit rating of a business on its business activities, accounts, budgets and a general knowledge of sectors and market conditions in the relevant industry. The mortgage institution will also value the property.

Factoring companies

Factoring is an agreement between a business and a factoring company under which the business transfers its future customer receivables to the factoring company.

In principle, factoring companies offer three different types of service:

  • debtor administration;
  • debtor financing;
  • covering of debtors' risks.

Investors and Business Angels

Investors are private individuals who wish to invest time and money in a business. You need to have a unique business idea and information about your project if you wish to be attractive to investors.

Business Angels are private investors who use capital investments to support a business in its early development. A Business Angel may be a valuable sparring partner who brings in industry-related knowledge and expertise to the new business.

Venture companies

Venture companies provide venture capital in the form of share capital for the start-up phase of a business. In return, the business must give up part of its right to future earnings and some of its control to the venture companies, who will usually add competent investors to the management structure of a business.

A debenture is a bond. It is issued by the State or by a credit union that deposits a security and promises to repay both the interest and the debt according to a set pattern.

Business support organisations can advise businesses on how to find financing.

Business support — Denmark

Source: Your Europe

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