Answers to Lending and Secured Finance Laws Questions in Finland

Different secured lending trends have evolved in Finland. The money lending trends have been moderate. And sometimes, they have been outrageous. However, what has been constant is the use of banks as the major financial lending platform in the country. Many companies on Suomiarvostelut also seek alternative lending means where they can insure their equity. While this isn’t entirely forthcoming, a trend of a diversified financial market increased.

That is, the increase in peer-to-peer lending transactions and crowdfunding. Today, the largest crowdfunding market in Europe is Finland. People’s opinions on Sortter also emphasize the need to create diverse access to funding in the country. However, international banks cannot offer basic financial needs especially for debt insurances and syndicated loans.

When it comes to regulation, people ask if secured lending is a regulated activity. However, for most banks and financial lending institutions, the lending activity to non-consumers is unregulated. However, credit institutions always need a license to prove their identities and credibility.

The need to identify international banks, local banks, etc. as an active provider of secured financing in Finland is also important. Smaller financial needs don’t exceed Finnish banks, but bigger ones often scale over multiple jurisdictions. The market facility established, therefore, helps in the facilitation of such secured lending transactions. There are also syndicated facilities to this structure. The structure employs the use of facility agents acting on behalf of banking institutions. Nothing else.

Although Finnish law doesn’t recognize or regard the idea of a “trustee” or “trust”, a security agent is always allowed to create a legal favor for lenders. This is from the practical perspective to protect their interest. There is also special-purpose financing for vehicles. This is a common transaction, and interest in Finland is calculated with reference to EURIBOR. However, while there are no regulatory restrictions on the interest rate for non-consumers, tax laws of the country often limit the expense of deductibility interest by a borrower. Yet, this isn’t a stern regulatory restriction.

To lend a loan, guarantees are used. The simple procedure of guarantee helps in the enforceability of legal jurisdictions. Finnish financial assistance laws also prohibit companies in Finland from offering funds, loans, or security to a third party. This is because the third party acquires shares from such a company through the process, and this doesn’t always provide corporate benefits.

Additionally, there are no stamp duties or document taxes levied against a borrower before a loan can be granted. In terms of cross-border lending, the Finnish laws cover the financing policies. However, if the financial request is large, English law is often the standard financing law used. When it comes to using assets as collateral, it is accepted, even real estates. It is most times as security collateral and it could be overtaken when the lender defaults repayment schedule.

In Finland, security is granted over the intellectual property like patents and trademarks, and every other entity that requires critical enforcement.

However, in events of bankruptcy, commitments and undertakings, as well as the estate of leased premises before the start of bankruptcy are under top priority. With pledges from secured creditors and lenders, forms of secured lending are achieved to protect mutual interests.