Small and medium-sized enterprises (SMEs) are often cited as the major driver of economies and a force in job creation. In Switzerland, SMEs make up 99% of all companies, employing two-thirds of all economically active persons, or approximately 3 million people, according to figures from Switzerland’s Federal Statistical Office.
Yet, SMEs still have difficulty securing proper financing to grow and access convenient and powerful financial tools to help them operate more efficiently without breaking the bank.
Alternative financing for Swiss SME’s
Thankfully, since the global financial crisis of 2007-2008, a plethora of disruptors in the fintech area have emerged to provide alternative ways for SMEs to secure funding.
One of the leading startups in SME Funding is Zurich-based Tradeplus24, a company founded in 2016 by a team of entrepreneurs from the banking and insurance industry, headed by CEO Ben James. Tradeplus24 provides financing solutions to SMEs, specifically targeting those overlooked by the big banks and overcharged by independent factoring providers.
The company offers a fully automated solution for SMEs to obtain a line of credit using domestic and international receivables as security. The solution can be plugged in to all cloud-based accounting packages and synergized with existing accounting software platforms to free up paperwork.
Contrary to a true sale factoring, Tradeplus24 allows customers to remain in full control of their accounts receivables as it only takes a silent assignment over them.
Tradeplus24 is backed by the likes of Credit Suisse, SIX Group and Berliner Volksbank Ventures, and after a couple of years operating in the European market, expanded to Australia in 2019.
Marketplace lending, also known as peer-to-peer lending, can be another way for small businesses in Switzerland to secure financing.
According to the Crowdlending Survey 2019, released in May by the Institute of Financial Services Zug IFZ of the Lucerne School of Business, PricewaterhouseCoopers (PwC) and the Swiss Marketplace Lending Association, there were five active crowdlending platforms in the business segment in Switzerland as of end-2018: Swisspeers, Lendico (acquired by Lend), Funders, Creditworld and Acredius.
Platforms including Cashare, CreditGate24, Crowd4Cash and Lend are active in both the consumer and business segments in Switzerland.
Swisspeers, for example, allows SMEs to get loans directly from private and institutional investors. The platform leverages a technology that facilitates automated information processing and loan auctioning in an investor-friendly manner.
Since the platform went live in June 2016, Swisspeers has successfully funded some 240 projects from 27 industries with a total funding volume of CHF 38 million. More than 1,000 investors have contributed to this success.
Whils Peer to Peer lending and crowdfudning gives further funding options, its still limited by a max lending cap and tends to be closer to factoring level prices.
Another innovative financing option is Investiere, a platform for startup funding and investing launched in 2010 by the team at Verve Capital Partners.
In contrast to crowdfunding companies, Investiere uses a hybrid model that combines traditional venture capital with elements of e-finance and social media.
All startups featured on the platform go through a rigorous due diligence process and investors, private and institutional, are able to choose the startup that sparks their unique interest.
Investiere delivers its services together with a global network of entrepreneurs, investors, subject matter experts and partners. The platform has invested in more than 70 companies so far, making it one of the most active startup investors in Switzerland.
SME accounting and useful Fintech solutions
Besides alternative financing solutions, Swiss SMEs also have the possibility to choose among Switzerland’s extensive list of innovative SMEs/business fintech solutions.
Abrechnungen.ch, by Rasminka from Zurich, for example, offers affordable accounting and fiduciary services to self-employed and SMEs with up to 20 employees.
Users simply have to scan, or take pictures of their receipts and other supporting documents, and send them over to the company. Abrechnungen.ch then carries out the accounting and sends back a monthly analysis as well as balance sheet, income statement and cash flow statement. At the beginning of the year, clients receive the complete bookkeeping for tax return.
Abrechnungen.ch also advises companies and entrepreneurs on topical trustee matters such as tax optimization.
Some other fintech startups serving the Swiss SMEs community are Zurich-based Amnis Treasury Services and Geneva-based B-Sharpe.
Amnis Treasury Services specializes in international payments and treasury services, currency exchange, risk management and related advice for SMEs. The company’s mission is to provide SMEs with the ability to settle foreign exchange transactions on the same terms as large companies, while being fully transparent regarding its fees.
B-Sharpe is helping SMEs save money on their currency exchange. Launched in 2006, B -Sharpe provides comprehensive services that enables businesses to manage their foreign exchange as well as their hedging operations more easily. The company also serves private individuals and is sometimes compared to be the Transferwise for Switzerland, but is very much Euro focussed.
featured picture via pixabay