Best Business Loans in Switzerland

Compare the best options on the market and choose the one which best adapts to your day-to-day needs.

Further Below: Our Guide To Business Loans in Switzerland, Everything you need to know.

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Business Loans in Switzerland, All You Need To Know:

We’re passionate about making the reader know everything about financing of businesses in Switzerland including the types of credits available, the eligibility criteria for these loans and grants, and the documentation required. Additionally, we make the loan application process seamless by equipping the user with all the secret tricks behind acquiring a credit that’s most consistent with their needs and peculiarities. 

[UPDATE] What economic measures has the Government implemented for companies through covid-19?

At the onset of the pandemic, Switzerland, just like many other countries in the world, started putting in place measures and policies that would help cushion businesses from the virus’ harsh ravages. In Spring 2020, the Federal Council channeled CHF 60 billion towards salvaging the country’s economy in different sectors and targeting different groups such as the employed, and the self-employed, among others. 

• The Swiss Government also put in place measures to delay loan and tax repayment or have temporary loan interests waived. 
• The measures allowed companies affected by the pandemic to temporarily defer the payment of social insurance contributions. The policy was upheld until 20 September 2020. 
• The government would provide loan guarantees to help salvage companies and SMEs by covering their current costs for about 3 months.
• Self-employed entrepreneurs whose businesses were grounded by the lockdown received compensation or insurance benefits through the earning loss allowance scheme. 
• The Confederation ran a guarantee program to ensure that SMEs feeling the heat of the pandemic can access transitional bank credits. The program made the process of accessing the credits easier and faster than in normal circumstances. The loan conditions were also excellent including long repayment terms of 5-7 years.
• Companies that had up to CHF 500 million in 2019 received credits worth 10% of the turnover at 0% interest rates because the government had full coverage of the loan. However, the guarantee was lowered for companies that exceeded the CHF 500 million cap at 0.5% interest rates. The government covered 85% of the loan. The interest rate for the remaining 15% was to be set by the bank. 
• SMEs that became over-indebted due to the pandemic enjoyed the “COVID-19 Grace Period” that would last three months and an additional 3 months upon request. This was only applicable to SMEs that became over-indebted not before 31 December 2019. 
• However, companies receiving the guarantee faced a few limitations. The companies would not be free to pay out dividends, repay capital contributions, or finance affiliates outside Switzerland, among others.

Distinguishing types of company profiles

There are several criteria used to finance your business. One major factor that determines the type of financing you get is your company profile, among other characteristics. Let’s delve into the different forms of business: 

Companies

Entrepreneurs: this refers to an imagined business that’s yet to materialize. Its materialization happens when the entrepreneur gets financing. Meanwhile, the entrepreneur only plans for it.  

Start-ups: this is a type of business that’s already operating but yet to gain ground. The business might still be experiencing losses and may not be giving much profits. At this point, the owner may need to get financing which becomes a problem when the business is not solvent enough. Most lenders will hesitate financing a business that’s not stable enough to assume repayment of the loan. Hence, the business may not be sustainable for the owner.

Consolidated companies: this type of business has been operating for a while, has much returns, and is solvent enough to qualify for some good loans. The lenders draw confidence from the company’s solvency when financing them. The business is sustainable.

Large companies: these are businesses with a large scale of operation, either national or international. The financing needs are also huge, mostly in millions of Euros, dollars, or francs, if not billions. For instance the Swiss Bank, UBS Group AG, Julius Baer, and Raiffeisen Bank, among others. 

Characteristics of business loans

The nature of a business loan depends greatly on the type of credit and profile of our company. Regardless of the uniqueness of the credit, below are some of the most common characteristics to look out for:

1. Cost: Two things may affect your loan cost: your business profile and the type of credit company. According to World Bank Statistics, the average lending rate in Switzerland as of 2020 was 2.6%, which the country has tried to maintain ever since. The average long-term interest rate, however, was -0.13% p.a in May 2021. This makes long-term loans much more affordable than short-term ones.
2. Loan size: this depends on your business’s particular needs, your marked-out business aims, and prospects.
3. Purpose: this cuts across different aspects such as purchasing goods, settling debts with your suppliers, and making more investments such as buying new machinery, among others.
4. Linkage: a business loan mostly comes as a package. Hence, you want to pay attention to its related products that may involve additional costs to acquire. 
5. Repayment terms: while your type of credit will determine how long your repayment term will be, most terms may last 3 months while others may take 60 months.
6. Grace period: at this time, you can go without paying the loan without attracting any penalties. 
7. Guarantee: your business profile and loan size will set different guarantee conditions. You may be required to present payment insurance with collateral especially if applying for a large loan size.
8. Speed: how soon you get the money after your loan application is approved is also a great subject of consideration. Averagely, you may have to wait for 3-21 days to have the funds in your hands.
9. Repayment: some entities will require you to make monthly installments while others will have you pay the whole lump sum plus interest at the end of the term. Hence, choose the one that best suits you. 

While the Swiss government has set the rules governing consumer credits, non-bank lenders tend to have eligibility criteria that are unique to them. Hence, it’s important to be sure of the terms of the contract before signing up for a loan. Conduct personal research about the credit company, its history, and reputation before taking out a loan.

Where to get business loans

As the thirst to break loose from the conventional way of providing loans intensified, many entities broke into the Swiss financial market. There are non-bank loan providers that have come up to compete with banks in terms of their loan conditions.

1. Banks: The company requesting a loan must be a legal entity and have a high level of solvency.
2. Companies and private capital lenders: Most lenders in this category have the loan application online, making it way easier and faster to get loans. Since the application process is fast, can be done from anywhere, and the credit has fewer eligibility criteria than in banks, many people prefer them. However, the loan size is mostly smaller than bank business credits.
3. Alternative financing platforms for crowdlending: these platforms are companies that will put us in contact with private investors who will decide whether to contribute working capital to our requests for business loans. These investors will receive benefits according to our level of risk, which we will pay them in the form of interest. All the processing of these credits is done online and in 48 hours we will be able to obtain an answer.

Business loan conditions

The requirements for obtaining financing will not only vary with the type of loan we go to but also with the entity with which we decide to apply for the credit. However, there are some basic conditions that all companies must meet to obtain loans:

National registration: According to Swiss Law, a business can only be legal when it has obtained national registration. Hence, this is one of the first qualifications that lenders will look out for before financing your business. Be sure to meet all registration requirements before applying for a loan to avoid going back and forth.

Annual income: Among the things you’ll need to have before qualifying for a business credit is your account records, annual financial statements, and annual resorts. The lender will require this information to assess your ability to repay the loan.

The seniority of the company: the time that your business has been running determines its stability and the type of loan it qualifies for. A business that’s been running for less than 12 months will receive less funds than one that’s been running for 5 years. 

Credit history: having a poor credit history will automatically disqualify your business from getting a business loan. The lender will check with different credit bureaus in Switzerland (ZEK, CRIF, and Intrum Justitia) before approving your loan application. 

Note: whether you meet all the requirements for financing or not, the lender is not obliged to give you the loan. 

Documents needed to get funding

• VAT return from the previous year and the current year.
• Income tax return.
• Bank statement (if in another bank).
• An updated balance sheet of the company’s turnover.
• Proof of payment of Corporate Tax.

The lender might ask you to drop the above documents at their offices or send them online through email, upload a photo, or use a courier. Check out with the entity to determine whether they require other documents besides what we’ve listed above. 

Other forms of financing for companies

Business credit lines

Business lines of credit have a unique method of financing where the borrower can access money in bits and as many times as they want until they reach their borrowing limit. The borrower is also required to repay the amount they have withdrawn plus the interest charged on it and not the whole amount that the lender grants. Many borrowers opt for this type of financing especially when they need constant financing in small amounts. 

Factoring

This type of financing works best with SMEs where the borrower gets financing for paying all the invoices to his suppliers. The borrower will be left to clear the amount used to pay the invoices with the lender plus the accrued interests, depending on the agreed conditions of the loan. 

P2B or crowdlending loans

Business crowdlending in Switzerland involves an online platform where the borrower gets business loans from a crowd. The online platform connects investors and the borrower. The investors may choose to directly finance the business or fund some projects, depending on our agreement.

Loans with mortgage guarantee

In this category, the borrower will need to present property which will act as some form of guarantee. Without it, the borrower will not be financed. The application process takes generally longer because it involves appraisal processes. Hence, it may not be the best option when we need fast loans.

Products to invest in our company

Equity Crowdfunding

Just as the name suggests, crowdfunding involves getting business funds that have been raised by many persons or entities. Through crowdfunding platforms, you can sell your investment instruments such as business shares, among others.

Business Angels

Business Angels platforms connect borrowers to potential investors. Business Angel investors do not work with an individual business proprietor, Instead, the managers select where they will invest. Once they select your company, they’ll always be part of the management. You might miss the opportunity of being funded by Business Angels if you’re only working on a small project.

3F (Friends, Family, Fools)

The 3 F’s (Friends, Family & Fools) are another source of finance for our business. The amount and other conditions depend on the agreements between both parties.

Aid for the financing of companies

Capitalization of unemployment

This type of financing is only available when the borrower is self-employed and wants to start a business. The borrower will access all the unemployment benefits if they use the capital to create a new company. 

Government Subsidies and Grants

There is a lot of government support to start or grow the business. Check out the Swiss Agency for Development and Cooperation website to determine whether your business is eligible for subsidies or grants.

About this page and our methodology

About this page: we are passionate about helping you to get the best financial product that’s consistent with your financial situation. We, therefore, marshal the best available information about consumer credits and how to compare the options so you may end up with the most attractive offer at the moment.

Source: the information regarding the main characteristics of loans in Switzerland and their current regulation comes from the World Bank statistics and the Swiss Consumer Credit Act, among other reference portals.

Methodology: The data relating to the conditions of these products (amount, term, interest, etc.) have been obtained through online research and consultation of the official statistics of the aforementioned reference sources.

About Us: FUNDGECKO is an online comparator website specializing in personal finance and home economics products. We help our users not only compare the available financial products in the market but also provide rich information that will shorten the decision-making process and help them end up with the best offer.

Note: the services we offer are totally free for the user, as FUNDGECKO obtains its income from advertising and its featured products.