Increased consumer protection in the credit market has been a hot topic over the past year. Now a survey by Norstat shows that a majority of Swedes also want to see increased protection for entrepreneurs who borrow. The survey, commissioned by Froda, examines Swedes' views and knowledge of banks and credit institutions.
97% of Swedish companies are one-man businesses or companies with fewer than 10 employees, which often lack finance departments and legal expertise. Despite this, there are not as strict rules on how business loans should be presented to the customer as there are for consumer loans. This means that loan providers are largely free to choose how they market their product, present their prices and design their terms and conditions.
- In Sweden, there is extensive legislation in the field of consumer credit that protects the borrower and makes it easier for individuals to make informed decisions when borrowing money. Entrepreneurs lack this protection," says Olle Lundin, CEO and founder of Froda.
The survey shows that four out of five Swedes are not aware of the lack of proper protection for entrepreneurs who borrow. However, there is broad support for increased borrower protection in business loans. Half of all Swedes say they want to see regulation and increased protection for entrepreneurs.
- Let entrepreneurs be entrepreneurs. Just because you start your own business doesn't mean you know everything about finance. Small business owners need the same protection as private individuals when it comes to advertising for loans and what the terms of the loan look like," comments Johan Grip, Chief Economist at Företagarna.
The survey also shows that price and good terms and conditions are the most important factors for Swedes when choosing a lender. In addition, 55% state that they find it difficult to understand banks' and lenders' agreements, terms and conditions. At the same time, 19% of Swedes state that they have at some point entered into an agreement with a bank or lender without fully understanding its meaning.
As a step in helping Sweden's entrepreneurs, Froda is now launching the Financing Handbook. The aim is to educate about financial terms and what entrepreneurs should consider before taking out a loan to help them make good financing decisions.
About the survey
The survey was conducted by Norstat during the period April 22 to May 5, 2024. 1009 respondents participated in the survey. It was aimed at the target group of the general public over the age of 18 and was conducted via Norstat's nationally representative web panel.
The survey shows that:
- Low interest rates/costs (82%) and good terms (65%) are most important for Swedes when choosing a lender
- 19% of Swedes have signed a contract with a bank/credit institution without fully understanding all the terms and conditions set out in the contract.
- 55% find it difficult to understand bank contracts, terms and conditions.
- Nominal interest (34), interest differential (34) and annuity (39) are the concepts that the least number of people can understand and explain.
- 36% of Swedes do not trust banks and financial institutions to provide all the information you need to make informed decisions.
- 49% do not believe that banks and credit institutions are transparent about their fees and costs.
- 77% do not know that business loans are not regulated.
- 50% think they should be regulated, but only 6% oppose regulation.
Posted
November 4, 2024
