Cash are the lifeblood of any business, especially in Colombia where liquidity for startup enterprises is tight and difficult to acquire. Loans in Colombia without collateral are almost non-existent, and interest rates on loans often exceed 20%.
In order to help young startups to overcome those barriers, Ruta N and Colombia announced this week a joint venture that will allow early stage companies to acquire funding for their enterprises. The funding, which will be provided in the form of loans with a grace period, will be focused upon companies in the science, technology and innovation (STI) sectors within the city of Medellin.
Loans will be further targeted to high-impact businesses, or those that project extraordinary growth, and will have terms that are tailored to meet the needs of each startup.
The loans will be facilitated through Ruta-N Capital, a new division within Ruta-N, and facilitated by Bancolombia. Loans will be given for periods of up to 60 months for commercial credit and 84 months for fixed asset credits, with a maximum grace period of 18 months. Interest rates will be set by Bancolombia according to each case, and loans will range from between US $35,000 and US $175,000, pending approval of each company’s expenditure plan.
To apply for these benefits, enterprises must fill out and deliver an application form describing their business model, along with other financial information. Ruta N will then analyze and grant a funding “pre-authorization”, called a certificate of viability. This certificate must be presented to Bancolombia, who will evaluate if the company meets their qualifications. If approved, the company will receive the agreed sum.
This initiative is one of many being offered by Ruta N in Medellin, with the goal to fund innovative projects and private investment funds. Ruta N also maintains a strategic alliance with Bancoldex in order to fund and support startups and young enterprises.