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Executive Vice President’s review of 2023: A year of new services and busy financing

Juuso Heinilä, Executive Vice President for SME and midcap business
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The Digitalisation and Innovation Loans as well as the Climate and Environmental Loans launched at the beginning of the year were well received. While year 2023 was busy in terms of financing granted by Finnvera, rapid changes in the operating environment, rising interest rates and fluctuations in demand have resulted in companies postponing their planned investments. The number of payment difficulties and bankruptcies has increased slightly, says Executive Vice President for SME and midcap business Juuso Heinilä.

What was year 2023 like from the perspective of domestic financing? 

Year 2023 marked the introduction of new products in domestic financing. The Digitalisation and Innovation Loan and the Climate and Environmental Loan, direct loans for which no collateral is required, were launched at the beginning of the year and received with interest by companies seeking growth in these areas. Our updated Entrepreneur Loan has made it possible to finance larger transfers of ownership. 

We have additionally brought out solutions for promoting responsible and green growth, for example by starting to use ESG reports as part of our company assessments. These reports ensure that Finnish companies operate responsibly and help us to guide and encourage them towards improved corporate responsibility. We have introduced a new operating model for processing early-stage growth projects that provides clear-cut product solutions to meet the needs of an innovative growth company. Our organisation enables more accurate tailoring of financing and specialisation in those growth projects that we consider particularly important for Finland's future.

Year 2023 was busy in terms of financing, and measured in euros, the amount granted was large. The number of financing decisions has been decreasing, as the demand for guarantees by the very smallest companies has declined. The increased risk awareness of banks was reflected as a slight increase in financing shares in individual financing projects. In our view, however, the availability of financing has remained at a relatively good level when compared to other European countries.

We worked closely together with Team Finland during the year, and we now also have access to Business Finland's analyses of the international competitiveness of technology, which facilitates the making of financing decisions, especially on start-ups about to launch into a phase of growth. The upgrade of our online service during the year improved the efficiency of our operation.

How willing were Finnish companies to invest in 2023? 

Investment projects have declined slightly if we measure the overall projects carried out in euros. Rapid changes in the operating environment, rising interest rates and fluctuations in demand have resulted in investments being postponed – some companies are taking a time-out.

What were the biggest successes and challenges of the year? 

Some of the greatest successes were the offer of new versatile financing solutions to meet the needs of SMEs and midcap enterprises as well as direct lending to export companies I already mentioned. The introduction of ESG reports was, in my opinion, also a great success. Maintaining a high level of client satisfaction and personnel experience is important, and they often go hand in hand. The aim is to develop and maintain the best client experience in the industry, and we will continue to measure and develop the client experience with a new partner next year.

The greatest challenges have been the same as those faced by our clients. The operating environment has become more difficult for companies since Russia attacked Ukraine. The special feature of 2023 was higher interest rates, which have now hit companies. The numbers of payment difficulties and bankruptcies have increased slightly.

What is the outlook for 2024 like?

From clients’ perspective, uncertainty would appear to continue. While interest rates are expected to no longer increase, and possibly start to decline, the operating environment remains challenging for many companies from the perspective of profitability. In the meanwhile, it would be essential for Finnish companies to have a stake in large international trends. Access to financing for companies that are boldly renewing their operations, investing and building the future also in this environment will be vital. Finnvera, together with commercial providers of financing, is committed to enabling the growth and internationalisation of these companies.

How is corporate responsibility visible in Finnvera’s business? 

Finnvera has a highly responsible mission – we are here to promote the creation of new companies in Finland and to support their growth, internationalisation and competitiveness. We wish to help Finnish companies operate responsibly and also create competitiveness this way.

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