The government has announced that it will make €100 million available in bridge loans for start-ups, scale-ups, and innovative SMEs. These loans will be distributed by the 'regional development companies' (ROMs) in the Netherlands .
In recent weeks, the Dutch Ministry of Economic Affairs and Climate, the combined ROMs, TechLeap, and InvestNL have worked together intensively to work out this plan. Work is also continuing with InvestNL and TechLeap on a joint program aimed at innovative start-ups and scale-ups.
The aim is to make it possible for companies to apply for bridge finance from April 20 onwards. In the coming period, the ROMs will communicate extensively about the criteria, interest rate and term of the loans, and the application procedure.
Survival of start-ups in jeopardy
A survey by TechLeap shows that 80% of start-ups expect to run into financial problems due to the Covid-19 crisis, with 67% looking for bridge funding because of liquidity problems. Each year, the ROMs are involved in about half of the early investments in innovative companies, which makes them by far the most active investors in the Netherlands. An in-depth analysis of the ROMs' portfolio companies also reveals that a large proportion of these companies will experience acute financial difficulties in the coming period.
Some start-ups, scale-ups, as well as other innovative companies are not covered by the arrangements made by the Dutch government so far, even though these are the entrepreneurs that play a crucial role in ensuring the country's innovative strength and future earning capacity.
Temporary bridge funding
With the funds made available by the Dutch Ministry of Economic Affairs, the ROMs will provide bridge loans to innovative companies that are struggling financially as a result of the Covid-19 crisis. It is explicitly intended as an emergency instrument to provide a temporary bridging loan, so that companies break even, or until a follow-up arrangement is available. The amount of the loans varies between €50,000 and €2 million; for larger amounts of funding, the ROMs will collaborate with InvestNL. Wherever possible, they will collaborate with private investors as much as possible.
'Regional development companies work with hundreds of innovative companies every day. The coronavirus crisis is having an enormous impact on these companies, and we are genuinely concerned that this will seriously damage the Netherlands' future earning capacity. We are therefore very pleased that the Dutch government is allocating a substantial amount of money to help these types of companies weather the crisis,' says Rinke Zonneveld (Director InnovationQuarter) on behalf of the joint ROMs. 'We are aware of the huge responsibility we have to ensure that this €100 million of government money reaches the right companies.'