OREANDA-NEWS. June 30, 2011. To promote activity of the domestic market of Latvia, the bank Citadele this year is ready to invest more than 100 million euro or 70.3 million lats in entrepreneurship of Latvia. Citadele will particularly support development of small, medium, and micro enterprises, by granting credit funds of the European Investment Bank and microcredits. The most recent results of Citadele Index show that the small (32 %) and micro enterprises (23 %) need the bank’s financing most, reported the press-centre of Citadele.

The new support instruments, financing of the European Investment Bank, and the microcredits allow entrepreneurs to receive long-term credit funds at a fixed interest rate. Moreover, microcredits are available without providing a real estate collateral. Both types of financing can be combined with the European Union or state support instruments.

“The aim of Citadele in the entrepreneurship sector in Latvia is to promote activation of the domestic market, by particularly supporting small, medium, and micro enterprises, which currently need help the most. Small and medium enterprises constitute more than 99 % of all economically active enterprises in Latvia. It is the development of small, medium, and micro enterprises that form a pre-requisite for establishing a stable middle class and less unemployment in Latvia,” maintains the Chairman of the Board of Citadele Bank Juris Jakobsons.

Stability and Predictability are Important for Entrepreneurs

Results of the Citadele Index study for the 1st quarter of this year show that nearly a half or 44 % of entrepreneurs, especially heads of micro and small enterprises, would choose a fixed interest rate for long-term loans.

“Financing of the European Investment Bank and microcredits at a fixed interest rate allows enterprises to plan precisely and fix monthly expenses, because these credit funds do not depend on market fluctuations of the LIBOR rate. Besides, the economists are forecasting that LIBOR rates will be gradually increasing over the upcoming years,” says the head of the Corporate Banking Sector of Citadele Bank Agnese Paegle.

“Financing of the European Investment Bank and microcredits are types of financing that will provide assistance to the pressing needs of the small and medium enterprises – for increasing liquid assets, for purchasing raw materials, goods, equipment, and tools, for modernising production units, and for increasing their effectiveness, as well as for developing new entrepreneurship directions, starting production of new goods and rendering new services,” says A. Paegle.

Financing of the European Investment Bank and microcredits will be available for the support of industrial, agricultural, trading, and service sector enterprises.

Citadele Index data show that leaders of 89 % of enterprises, who need credit funds, have pointed out that the optimum term would be two and more years.

Financing of the European Investment Bank is available also at a fixed interest rate for up to three years with the maximum maturity – 10 years. Financing available for one enterprise ranges between 4 thousand and 12.5 million euro.

Meanwhile, the microcredit is available at a fixed interest rate for up to 5 years, without a real estate collateral. The financing amount for one enterprise – 5 thousand to 30 thousand lats or equivalent amount in euro or US dollars.

In the process of granting credit funds of the European Investment Bank, Citadele Bank will continue collaborating with Latvian Chamber of Commerce and Industry (LCCI), within the framework of which in evaluating the applications by enterprises the bank will have the option to receive an expert examination of LCCI.

LCCI Chairperson of the Board Endzins: “In overcoming economic crisis, financial accessibility is one of the key issues in growth and increasing international competitiveness of enterprises and consequently of the state. Being the biggest organisation uniting entrepreneurs, we can ascertain that the mutual collaboration between the banks and entrepreneurs during the last couple of years has considerably improved, it has been a lesson learned in the times of the crisis. Collaboration between LCCI and Citadele Bank in preparing criteria for granting credit funds of the European Investment Bank is the first pilot in creating higher quality collaboration in the field of crediting between the bank, entrepreneurs, and NGOs uniting entrepreneurs. The next step in this successfully commenced collaboration – an expertise to be performed by LCCI upon involving associations of the sector to evaluate specific projects for the bank.”

Citadele Index – Bank Financing for Enterprises is Still Relevant

Bank financing has grown to be a significant support for development of companies. Citadele Index data of the 1st quarter of this year show that overall bank financing is needed for ? of enterprises operating in Latvia. Small and micro enterprises need it most – 32 % and 23 % respectively.

Bank financing is important also for implementing projects co-financed by the European Union. Citadele Index data show that 43 % of companies implementing or planning to implement a project co-financed by EU need bank financing.

Out of all sectors, financing is most needed in enterprises operating in manufacturing and trading – 32 % and 34 % respectively.

Bank financing for enterprises is needed most to increase liquid assets (52 %), as well as for purchasing equipment and inventory (43 %). Meanwhile, projects co-financed by the European Union mainly are planned for improving production effectiveness, increasing production capacities, introducing innovations, and improving effectiveness of service rendering.

Citadele Index data of the first quarter of this year indicate that the entrepreneurs’ mood is gradually improving – the optimism of large and medium enterprises by the number of employees is now taking over also the small enterprises, and the entrepreneurs’ future forecasts are rather optimistic. However, at the same time it can be observed that the big enterprises by means of turnover (with turnover exceeding 1 million lats) and enterprises with foreign capital are optimistically inclined. Meanwhile, the small and micro enterprises by means of turnover (turnover up to 75 thousand lats) and enterprises with domestic capital only are rather pessimistically minded.