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Loan guarantees in Switzerland: Financial support for starting a business, for investments, expansions and for succession planning

For starting a business, for investments and for succession planning many small and medium-sized enterprises (SME) depend on bank loans. However, banks are often hesitant in providing these credits. That is why four Swiss cooperatives support businesses in their commercial lending matters. The cooperatives act as a joint security to the bank that is providing the loans and credits up to a maximum of 500'000 CHF. This set up has proven to make it a lot easier for SMEs to get a loan. By acting as a guarantor, a bank’s unfunded credit risk drops, which in turn can have a positive effect on the lending decision. Especially smaller loans, which otherwise would cause banks an administrative burden, are often secured this way.

These four guarantor cooperatives are synonym for a secure and future way of financing Swiss SMEs and are the only ones officially recognized by the Swiss State Secretariat for Economic Affairs (SECO). The Swiss federal government and the cantons are taking on their share of administrative costs that occur with the cooperatives. The Swiss federal government will take on up to 65% of losses made.

The cooperative organizations are represented by the BG Mitte (www.bgm-ccc.ch / also for the Canton of Basel-Stadt) in Northwestern Switzerland, as well as by the nationwide BG SAFFA (www.saffa.ch), which focuses on women entrepreneurs. „BG Ost“ and „Bürgschaft Westschweiz“ are active in the rest of Switzerland. Having such a regional focus allows for the best possible and individualized consulting services.

Complex financing processes should be made as easy as possible for entrepreneurs. In order to provide the best options, the cooperatives collaborate with all the banks in Switzerland and provide SMEs access to financing with a bank.

It is important to the cooperatives that a SME can apply to receive a guarantor in only a few steps. The administrative burden during the application process is quickly manageable and feasible. It is advisable however to engage the cooperative early on in the lending process and in negotiations between the credit borrower and the bank. 

The guarantor cooperatives value a close working relationship with their SMEs and they have the necessary experience to cater to individual client needs.

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