Business loans for small businesses

Whether you need to invest in new equipment, deal with seasonal fluctuations or want to expand your business, a small business loan will help you achieve your goals.

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What is the difference between business loans for small businesses and those for large corporations?

There is really nothing that distinguishes business loans for small businesses from business loans for large companies.

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The biggest difference lies in the assessment process. Larger companies often have a long track record, detailed financial statements, and assets that can be used as collateral. Small businesses—especially sole proprietorships or newly established corporations—rarely have the same conditions. Revenue can vary, and there are often no significant assets to use as collateral. Froda therefore assesses current and future potential rather than relying solely on historical figures.

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What are the different types of financing available to small businesses?

Business loans for small businesses are usually annuity loans —you pay a fixed amount each month that covers both interest and principal. Depending on your needs, another type of financing may be a better fit, such as equipment financing or agricultural loans.

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Line of credit is also common. It works as a credit limit where you only pay interest on the amount you actually use. For businesses waiting for customer payments, factoring can be an option. This means you sell your invoices and receive payment immediately. Other options include microloans for smaller amounts and business leasing for equipment.

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Is financing for small businesses more expensive or less expensive?

Some people believe that business loans for small businesses have unfavorable terms and are expensive. The truth is more nuanced than that. The interest rate is the only cost at Froda. It is always set individually and based on the company’s creditworthiness and transaction data. There is also no fee for paying off the loan early, which means you can pay it off whenever you want and thereby reduce the cost of the loan.

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How much can you borrow as a small business?

The loan amount for small businesses depends on several factors, primarily your ability to repay the loan. We always base our calculations on your ability to repay the loan and conduct a comprehensive assessment. At Froda, you can apply for loans ranging from 5,000 SEK up to 5 million SEK.

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A business with stable and growing sales can borrow more than one with fluctuating or declining revenue. Don’t borrow more than you actually need for your planned investment—an excessive debt burden can become a strain. Generally, loans for small businesses can range from a few tens of thousands of kronor up to several million. However, it’s important that you make a realistic assessment yourself. Do not borrow more than you actually need for your planned investment or to cover your liquidity needs, as a loan that is too large can become a burden on the business.

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What are the requirements for business loans to small businesses?

1. The company must be registered in Sweden.
2. The business must be a sole proprietorship, a general partnership, a limited partnership, or a corporation.
3. The company must have active sales.
4. The company must not have any outstanding debt with the Swedish Enforcement Authority

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As an applicant, you must hold a leadership position within the company, such as owner, CEO, or board member. All of our loans for small business owners require a personal guarantee as collateral. This means that one or more individuals in the company will be personally liable for repayment if the company is unable to repay the loan.

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What can I expect in terms of interest and payments?

When you take out a loan for your small business, it’s important to keep track of both the interest rate and the repayment term. The interest rate you receive is tailored to your specific situation and is based on your business’s unique circumstances and creditworthiness. There are never any fees in addition to the interest rate

Repayment is also flexible. You can choose between daily and weekly payments to suit your company’s cash flow, and you decide the repayment term for the loan. A major advantage is that you can pay off the entire loan early without any additional costs. This means you only pay for the time you actually use the funds.

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What extra tips make life easier as an entrepreneur?

With Froda, you can manage your loan, view your repayment schedule, and easily get an overview of your options on My Pages. You can add your accountant as a user so they have direct access to the documentation needed for your financial reporting. You also have the option to pause your repayments if necessary—for example, if a large customer payment is delayed.