Business get increasingly eager to borrow for growth

The determination of small businesses to invest into development has grown steadily. As many as 88% of businesses would use external finance to be able to expand their activities. These were the results of the survey of 300 company managers conducted by Spinter at the request of UAB Investicijų ir verslo garantijos (Invega). According to the results submitted in early January, the same indicator stood at 83% last January and was 71% in 2013.

According to Audrius Zabotka, Director General of Invega, the business community should invest more in innovation and gaining a technology edge in the coming years. "I believe it will be a priority for many small companies which want to be competitive or gain strength on other markets. New and original business ideas or ideas brought in from elsewhere and successfully adapted here will be of equal importance," Zabotka says.

Based on the survey, SMEs are open to using loans to finance their working capital: 40% of the respondents were in favour of this option this year, up from 33% last January.  A third (34%) of business companies indicated they had business development plans which required external financing: 9% have already begun implementing them and 25% are still in the preparation phase.

Prof. Gerda Žigienė, head of the Lithuanian Financial Markets Institute, believes that development is important for every business at either its start-up, maturity or established phase.  "What should be remembered, however, is that the word "development" means different things in every case.  Development may mean conquering the market for a start-up, investment in new technology for a mature company or investment in human resources for an established business," Žigienė adds.

Another survey conducted on the initiative of the Lithuanian Venture and Equity Capital Association last year showed that the vast majority of companies would use additional financing to acquire equipment, invest in premises, purchase products or stocks and invest in technological upgrading. Companies were least interested in acquisitions of other companies, refinancing of existing loans or purchase of own shares.

Businessman Karolis Samušis says that planning corporate development and putting it in place is a constant state for the company based on specific assumptions. "Development is constantly on our mind for two reasons. First, our product has a worldwide market so we compete against large companies which are continuously investing heavily into technological products.  Second, it is only natural that we strive to boost turnover which would be impossible without development," Samušis says.

He manages Nep Pipe, a company which has taken advantage of loan guarantees offered by INVEGA, and manufactures, installs, assembles and builds insulated piping systems, installs and maintains breakdown control systems.  At present, the company focuses on the development and export of new technology as well as the improvement of internal resources by updating its production facilitie