Compared with data from 2013, entrepreneurs started to implement larger-scale business projects and more than half of small enterprises invested in developing their businesses further last year. UAB Investicijų ir Verslo Garantijos (INVEGA), which is implementing the set of financial instruments developed on the initiative of the Ministry of Economy, issued 577 guarantees to small and medium-sized businesses (SME) on loans issued by credit institutions totalling EUR 40 million (11.4% more than in 2013). This enabled SMEs to borrow EUR 58.3 million (6.8% more than in 2013) to start new businesses and develop new ones in Lithuania.
“There are quite good conditions to start a business in Lithuania. This has been confirmed by World Bank data – Lithuania ranks 11th in the world according to its business start-up rate. We are trying to give equal weight to development issues while integrated measures such as guarantees, preferential loans and partial compensation of interest are only a few of the financial incentives that we offer to those who want to expand their business,” said Marius Skarupskas, Chairman of the Management Board of INVEGA.
When small businesses are looking for funds to start or expand a business, the support provided by the State is particularly important. Funding which is guaranteed by the state is considered to be less risky so credit institutions and leasing companies are more prepared to loan to such projects.
Some entrepreneurs think that expanding a business is beset by complications. However, there are opportunities available and an increasing number of entrepreneurs are discovering them. “Large scale business projects are possible when one considers the number of assistance packages available from the EU as well as trends in bank funding. So cashflow and revenue streams do not present such large hurdles. The most important thing is to earn trust and to precisely calculate and evaluate everything beforehand – the market, staff, revenue and costs,” Vitas Černiauskas, Manager of Bioeksma, the company which supplies devices to laboratories, said.
Where businesses continue to plan their development consistently, they are more likely to last longer than five years. Almost half of all guarantees – 47.8 per cent – are issued to such enterprises. A combination of financial instruments had an impact on business start-ups and entrepreneurs. According to Audrius Zabotka, Director General of INVEGA, a total of 15 guarantees per month are provided for projects that have been initiated by firms that have been operating for less than a year. Last year these entrepreneurs accounted for almost one third (30.2 per cent) of all those who received INVEGA support for a business start-up.
“Where one’s own funds are insufficient to finance growth, there is always a solution; it is important to know what kinds of opportunities are available and to select the most appropriate method for a particular enterprise,” said Audrius Zabotka.
The largest number of INVEGA guarantees (35.2% of the total number of guarantees) were provided for loans granted to manufacturing companies. Slightly fewer – 29.8% – were provided for loans taken by trading companies. The number of companies providing a variety of services grew marginally with 28.4% of guarantees (25.85% in 2013) taking loans.
In 2014, small businesses were more inclined to seek funding for investment. A total of 57.9% of guarantees amounting to EUR 19 million were provided for investment loans, whereas slightly fewer – 42.1% – were issued to secure loans for circulating assets intended for business development.
In 2014, the average amount of guaranteed loans equalled EUR 102,000, whereas the average amount of provided guarantees made up EUR 70,000.
Between the launch of its activities in 2002 and the end of 2014, INVEGA has provided 5,242 guarantees to credit institutions for loans. During this period, the amount of guaranteed loans equalled almost EUR 578.4 million, the guarantee amount made up EUR 391 million and the number of planned jobs stood at 14,610.