In the first eight months of this year, the number of loans granted by financial institutions to small and medium-sized enterprises is generally stable, according to information gathered by AS “Kredītinformations Birojs”.
In the first eight months of this year, the number of loans and the average amount of loans increased slightly for limited liability companies (SIAs) compared to the corresponding period last year. Significantly more farms borrowed.
“Our data show that the war waged by Russia in Ukraine did not have a significant impact on the financing of small and medium-sized enterprises. A slight decline in SIA loans can be observed in April, but subsequently the situation has stabilized again. At the moment. , the average amount of the loan granted to SIA is about 35 thousand euros. The case of loans to agricultural companies is different, where since the beginning of the year there has been stable growth. If in the first eight months of last year the amount of loans to farms was fluctuating, now it clearly shows a positive trend and the average loan amount is around 100 thousand euros, 28% more than last year “, informs Intars Miķelson, member of the board of KIB.
About a fifth of the loans were made to companies operating in the agricultural, forestry or fishing sectors and about 16% – to wholesale and retail trade, as well as to automotive repair companies. There have also been active companies that provide professional, scientific or technical services, dealing with construction or production.
The amount of funding disbursed by SIA varies mainly from 5 to 50 thousand euros, but for farms starting from 20 thousand and exceeding the limit of 100 thousand euros, because most of the time modern agricultural machinery or agricultural equipment is purchased. About half of the loans are finance leases and just over 50% of the loans are issued with collateral.
Late payments continue to decrease compared to pre-pandemic times. If in 2019 about 6% of the contracts signed with SIA were not paid in time for the financial commitments, at the moment just over 1%. Not so drastically, but the credit situation of farms is also improving. This shows that payment discipline has increased during the pandemic, which can be seen as a positive side effect of the pandemic. However, entrepreneurs are wary of taking on additional financial obligations in the future.
“Although payment discipline can be improved for those companies whose sectors have not been directly affected by the pandemic, the current economic and geopolitical situation and growing uncertainty make SMEs wary of taking on new debt. In Intrum’s European payments report, which covers 11,000 European companies, 21% of Latvian small and medium-sized businesses indicated they want to be more cautious about taking on new debt, a third of them plan to reduce costs and 17% of small and medium-sized enterprises will reduce the hiring of new employees. The data also shows that a large number of small and medium-sized businesses lack the skills to successfully manage the impact of inflation on their business, while 66% of companies expect their debtors to start paying their bills this year. late or not at all, “explains Ilva Valeika, the largest general manager of credit and debt management at the Baltic debt collection firm Intrum.
