Articles

Holiday times are in full swing and summer has so far offered a mix of sun, rain and positive macroeconomic news. But what does it really mean for you as an entrepreneur and what can you expect going forward?

‍

‍

At last, inflation is falling

Inflation in Sweden has fallen continuously since the peak in December 2022. However, May offered disappointment when the inflation figure was unchanged from April and higher than estimated. June, on the other hand, brought some really positive news. After being above the Riksbank's target of 2 per cent in late August 2021 landed inflation of 1.3 per cent According to the CPIF which is the measure the Riksbank goes by. A figure that was lower than both the Riksbank and the market forecast.

‍

This is positive news for entrepreneurs on several fronts. Inflation leaves customers at risk of pulling down on deals as their overheads increase. But it also affects entrepreneurs in the same way that it affects consumers, where high inflation leads to increased costs for the purchase of both goods and services. More price-sensitive customers at the same time as you suffer from cost increases is a difficult balancing act, but the fact that inflation is now falling will hopefully lead to the situation moving more towards normal.

‍

Bankruptcies are decreasing

Another positive message from the summer was that credit reporting company UC reported that Bankruptcies decreased for the first time in two years. Bankruptcies, however, remain at record levels seen for the year as a whole, but a reduction instills optimism for the second half of the year. Just as inflation affects in several ways, bankruptcies do so with it. Reducing the number of bankruptcies therefore has a positive impact on the entire food chain.

‍

The key interest rate will be lowered

The Riksbank has so far this year lowered the key interest rate by 0.25 per cent in May and in recent monetary policy. The decision signalled that there could be three more cuts this year. The consensus among economic analysts is that there will be between two and four cuts this year and the majority of big banks believe the first occurs as early as August. The fact that the key rate is being cut is a relief for both households and businesses that have been squeezed by the high levels of interest rates.

‍

What does it mean for entrepreneurs?

The fact that inflation is falling, bankruptcies are decreasing and the key interest rate is a positive thing for society as a whole. As an entrepreneur, it also means that you can hopefully start to exhale after the tough period that has been. When the key interest rate falls, the purchasing power of the community increases and as an entrepreneur, you can expect sales to pick up again. The cuts will also have an effect on several levels. As interest rates decrease, your suppliers' costs will fall, which is likely to have positive effects on your purchase prices.

‍

In the long run, reductions in the key interest rate will also lead to a reduction in financing costs for companies, which have a certain lagging effect compared to variable mortgages. The cost of investing in your business will therefore drop it by. All in all, the positive news of the summer means that you as an entrepreneur can start looking more hopefully towards the future and go into autumn with optimism.

‍

Right now, a fraud attempt is underway in which someone calls from hidden number, pretending to be Froda, urging to settle loans prematurely. The calls are not from Froda and we urge you to hang up if someone calls and asks you to settle your loan ahead of time.

‍

It happens that Froda calls out to you as a customer. However, when we call, we never do it from a hidden number. We will also never ask you to identify when we call or urge you to settle your loan early. If you receive a call or text asking you to settle your loan early, we urge you to contact our support.

In 2020, the Swedish Tax Agency introduced a temporary possibility of deferral of tax payments to support entrepreneurs who suffered financially during the pandemic. The aid has been extended in instalments but on 12 September this year it is time to start cashing in the tax. This is something that can cause problems for companies that do not apply for installment payments on time.

‍

The corona pandemic was tough on society at large but one group that was hit particularly hard was the country's business owners. While revenues slowed down, or at worst stopped off entirely, costs were made up. Therefore, a series of measures were introduced to help entrepreneurs financially during a deferred period. One of these measures was that the Swedish Tax Agency introduced a temporary reprieve which gave the possibility to defer payment of employer contributions, deducted tax and VAT.

‍

How the forbearance worked

The waiver could be applied for the accounting periods January 2020—January 2021, October to December 2021 and April to June 2022 and was divided into several levels. At the initial stage, companies could apply for a grace period of up to 12 months, but at the latest until 12 September 2023 (17 January 2024 for companies that report VAT once a year). After that, companies could apply for an extension of grace for up to a further 12 months until 12 September 2024 (17 January 2025 for companies that report VAT once a year). Thus, depending on when companies applied, they have been able to obtain a grace period of up to 24 months for the tax payments.

‍

It happens when the forbearance expires

When a company has had a temporary grace period of 24 months, or shorter if limited by the closing dates, it will have to pay the deferred tax. The Swedish Tax Agency sends out information about 30 days before the end date of the deferral with information about when the money is due and how much interest and fee will be added (the grace was not free of charge, but there will be interest on expenses and a grace fee). For all companies with monthly or quarterly accounts that applied for an extension of the forbearance beyond 12 September 2023, this will be around 12 August.

‍

Postponement can be paid in part

Fortunately, the vast majority of companies do not have to pay the full amount in one fell swoop. When the extended grace period expires, companies may apply to extend the period of grace for up to 36 more months, provided that an installment plan is established. However, in order to apply for an installment plan, the company must have had a temporary grace period of 24 months, or as far as possible if limited by the end dates.

‍

The instalment can be divided into at least two instalments and a maximum of 36 instalments over a period of maximum 36 months. However, the bulk of the repayment must occur during the first part of the installment plan.

‍

‍

Read more about the temporary deferral of tax payments and how to apply for an installment plan at Swedish Tax Agency's website.

‍

Starting a business is an exciting but demanding journey. With preparation, planning and a balanced approach, you can navigate the challenges and build a successful business. In Sweden, with its supportive business climate and strong culture of innovation, there are great opportunities for entrepreneurs to establish and develop businesses. This guide will give you an overview of what you should consider when starting a business.‍‍

‍

Develop a business idea

The first step in starting a business is to have a clear and feasible business idea. Identify the needs and behaviors of your potential customers, current trends and potential niches. An effective method is to conduct market research or focus groups to test the impact of your idea. Don't be afraid to adapt your idea based on feedback and new insights. A flexible and responsive approach can be the difference between success and failure.

‍‍

Choose business structure

Your choice of business structure when starting a business affects everything from tax management to how you can scale up. It is therefore not just a matter of feeling, but you should choose the business structure that best suits your business. An individual company is suitable if you run the company yourself and if the business is small to begin with. An individual firm offers simplicity and complete control, but carries personal responsibility for liabilities and risks. Limited liability companies offer legal separation between the company and personal finances, but require more administration and a start-up capital. Understand the differences and risks of each business structure to choose the one that best suits your company's long-term goals.

‍

Your choice of business structure affects everything from tax management to how you can scale up your business. Understand the legal and financial implications of each form, from individual firm to limited liability company. Consider your long-term business goals and choose a structure that supports both your current situation and future growth.

‍

The choice of business structure is one of the first decisions faced by aspiring entrepreneurs and affects everything from administration and tax management to boundaries between the company and you as an entrepreneur.

In Sweden, there are essentially four forms of business if you want to start a business. Each type has its respective advantages and disadvantages and is therefore suitable for different types of activities.

‍

• Sole trader: For the solo business owner who runs a small business. It is easy to start and does not require any start-up capital. However, you are personally liable for all of the business's liabilities and legal obligations, which may involve a higher personal risk.
• Limited companies: Suitable for larger businesses that have a higher level of risk, if you need to raise external capital or if you want to separate the business's finances from your personal ones. To start a limited company, you and your potential co-founders, must enter with a share capital of at least 25,000 SEK.
• Trading partnership: Suitable for businesses where two or more people want to operate together. All owners are jointly and severally liable for the liabilities of the business.
• Limited partnership: Similar to trading partnerships but has two types of shareholders: general partners who are active in the company and have full responsibility and limited partners who are co-financiers but only risk their stake in the company. This is a good option for those who want investors without giving them full responsibility.

‍

Consider which business structure best suits your business goals, risk tolerance, and long-term plans. For some, it can be beneficial to start the company as an individual firm and then transform the business into a limited company as the company grows while limited companies from scratch are better suited for others. It may also be wise to consult with a legal or financial advisor before deciding which business structure to choose.

‍

Register the business

After choosing the business structure, the next step is to register the company. This includes registering with the Swedish Companies Registration Office and the Tax Agency, as well as making sure that you have all possible licenses and permits in place. It is also important to establish solid accounting and bookkeeping from the start, and it can be beneficial to bring in an accountant or bookkeeper to manage finances if you do not want to or can do it yourself. Also pay attention to trademark protection and intellectual property rights if your business idea includes unique products, services or technologies when starting your business.

‍

‍Make a financial plan

Well thought out financial planning is fundamental when starting a business. This includes not only securing initial financing but also creating a sustainable economic strategy for the future that includes pricing strategy, cost control and investment. Set a realistic budget that includes both fixed and variable costs as well as potential sources of income. Keep track of your cash flows and be prepared to make adjustments if necessary. A robust accounting system and regular financial review are recommended to help you better understand your business's financial health and be able to make informed decisions.‍

‍

Develop a marketing strategy

Marketing is crucial to building a brand and attracting customers. Like anything else, it's easier to succeed in marketing if you have a set strategy for how you want to work with it right from the moment you start your business. A marketing strategy aims to build a strong brand that communicates your unique value proposition and should include a combination of digital marketing, content marketing, keyword optimization, and if possible, traditional marketing. Be consistent in your marketing across all platforms and try to build a strong social media presence to interact directly with your target audience. Evaluate and adapt your strategy based on measurable results and customer feedback.

‍

‍Plan for scalability

The long-term success of your business depends on your ability to scale and adapt the business. To succeed, you need to have a clear vision for how your business can evolve over time. This includes not only product development and market expansion, but also investing in personnel, technology and scalable processes to cope with increased demand and complexity. Being proactive makes it easier to react quickly to market changes and new opportunities.

‍

Starting a business is a process that requires patience, perseverance and a willingness to constantly learn and develop. By planning ahead, being persistent and continuously evaluating and adapting your strategy, you can build a strong foundation for your business and achieve long-term success.

Pandemic, high electricity prices and inflation. Running a business is hard enough as it is, and it has hardly become easier when outside events throw around the conditions. Flexibility has always been important for entrepreneurs but becomes even more important in times like these — especially when it comes to business finances and finance.

‍

‍

As an entrepreneur, you are often forced to make decisions without having all the information available and it often becomes a measure of trying to predict and plan for what is to come. While it doesn't usually happen as transformative of events as it has in recent years -- especially not with the time interval that it has -- it is more rule than exception that things change. The company grows, unexpected events occur, and opportunities appear.

What was once optimal for your business doesn't have to be one, two or twelve months later. So that you do not get stuck with something that does not fit here and now, we have therefore made it easy to adjust. Has an investment opportunity popped up, has the revenue stream changed or do you need some extra liquidity for a period? At Froda, you can easily log in and adjust your loan to fit the needs of your company today.

‍

‍

Adjust your repayment rate

Choose between paying back the loan every weekday, once a week or once a month. How often you amortize has no impact on the total cost of the loan, but different repayment rates suit different companies depending on preference and revenue stream. If your company's sales have become more continuous and ongoing, you can change to a higher frequency repayment rate to have less volatility in liquidity. Correspondingly, you can lower the frequency if your company gets paid for its products and services at given times, in order to match the amortization to when there is money in the cash register.

‍

‍

Make an additional deposit

You can always pay off part of your loan with Froda without any additional costs. You choose the amount you want to repay and the refund is fully automatic by logging in and triggering an additional payment. By making an additional deposit, you can lower the company's current expenses. You also reduce the total cost of your loan as you reduce the loan amount, which leads to a decrease in your interest costs as well.

‍

‍

Expand your loan

By logging into Froda, you can always see your available loan space and extend your loan whenever you need. The space is updated as the company's turnover allows you to continue investing as the company grows and have an available buffer in case something unexpected happens. Since you are not tied to the amount you applied for, you can also start by borrowing a smaller amount if you want to make an investment, and increase the investment if it falls well, thus keeping the risk down.

‍

‍

Extend the maturity

Do you want to reduce the size of your refunds or do you need the money a little longer? You can easily log in and extend the term of your loan. In this way, you can both reduce the company's current expenses and have access to finance longer.

‍

‍

Pause the amortization

Sometimes you may simply need a break. Therefore, you can always pause the amortization of your business loan with Froda. You can pause the amortization whenever you want and as often as you want for up to 6 months. When you pause the amortization, you only pay interest while it is paused, thus freeing up liquidity that can be used for other purposes and reduces the company's expenses for a period.

Most businesses need to inject external capital occasionally. Here are six tips on things to consider before taking out a business loan.

‍

‍

Purpose of the loan

Only borrow money when there is a clear purpose of the loan and a plan for how the money will be used to grow the business. It can be to finance purchases, invest in property or to hire someone. If you borrow money without a clear purpose, it means that your company incurs unnecessary costs.

‍

‍

Loan amount and repayment period

How much you borrow and the length of the repayment period you choose will affect the total cost. Borrow only as much money as you need and choose a repayment period that suits you and your business. Shorter repayment terms means that you have to make larger individual repayments, but that the overall cost of the loan will be lower.

‍

‍

Look at the total cost

It's easy to blindly look at the interest rate comparing business loans, but there are many other aspects that play into the cost of the loan. Invoice fees, setup fees and administrative fees are things that can have a big impact on the total cost. It's also important to check whether the interest rate that's presented is an annual or monthly interest rate. Make sure you know the total cost before you take out the loan so you don't get an unpleasant cost surprise later on.

‍

‍

What repayment rate is right for your business

There are different ways to pay off a loan, and it's important to look at your business's revenue stream to choose the option that works best. For example, if your business has mainly daily sales through card transactions, amortization in smaller amounts on a daily or weekly basis may be appropriate as it does not affect the liquidity too much. If you are paid by invoice instead, larger monthly repayments may be preferable.

‍

‍

Possibility of early repayment

Needs can change over time, which is why it is important to ensure the possibility of paying off the loan in advance. With a loan with no commitment period, you can choose to repay the loan early if you no longer need it. This way you can lower the cost of the loan.

‍

‍

Do your research

Review your options before taking out a business loan. Compare different lenders to see which one can give you the offer that best suits your business. A tip is also to see what other customers think of a lender by reading reviews on Trustpilot, for example.