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Within the framework of the Small and Medium Business Support Program, Luminor bank in co-operation with Altum has already issued unsecured loans in the total amount of EUR 5,3 million. The most active entrepreneurs using this support program are located in Riga (20%), as well as in the largest cities in regions, i.e. Daugavpils, Liepāja and Rēzekne.
For a year and a half, businesses have had an opportunity to apply for unsecured loans, and so far, the loans have been issued to customers in various industries. The lent amounts vary from EUR 3,000 to 75,000. To date, 130 small and medium enterprises from different regions and industries, both service providers and manufacturers, have already availed themselves of an unsecured loan. The purpose of using the loan also varies, ranging from repair of premises to substantial investments in the development of investment plans and acquisition of production equipment.
Companies of three industries - freight and logistics, forestry and logging, as well as construction - represent 16% of all customers. The loans are most often used to finance current assets, four fifths of the loans have been issued for such purpose, while 20% of loans have been issued for acquisition of second-hand equipment which is more often done by companies in the forestry and logging industry. In turn, various service providers most often use the loans for acquisition of fixed assets (75%) and increasing current assets (25%).
One fifth of the borrowers are companies located in and near Riga, using almost half (43%) of the total amount lent so far. In turn, the activity in regions is lower, and it is concentrated in regional centres, for example, 9% of all loans have been issued to companies in Daugavpils, 5% - in Liepāja, and 4% - in Rēzekne.
The SME survey carried out by Luminor last autumn showed that 41% of small enterprises in Latvia plan to expand their business in 2020, which may indicate an increase in demand for funding this year. However, it should also be taken into account that customer surveys show that the enterprises are expecting to be more cautious this year, which is related to the UK withdrawal from the European Union, as well as other events in global politics. Furthermore, Latvian entrepreneurs are more cautious in searching for new possibilities of financing compared to Lithuanian and Estonian entrepreneurs.
The Luminor unsecured loans for small and medium enterprises in co-operation with Altum, or Portfolio Guarantee Program, is designated for small and medium enterprises that need funding of up to EUR 75,000 to achieve their business goals. The loan is intended for entrepreneurs who are financially sound but lack sufficient collateral or have specific circumstances that restrict access to funds, for example, they need to acquire specific equipment that the bank cannot use as a collateral.