In order to facilitate the development of small and micro companies in Latvia, the Citadele Bank is offering a new microloan type for the needs of retailers under the name “Financing for Retailers.” The aim of the service is to make it easier for small and micro companies that offer clients a chance to make payments with payment cards to receive loans.
Each loan will be limited to EUR 1,000 to 20,000 with no collateral necessary. During the first nine months of next year, Citadele plans to issue approximately 600 loans for a total sum of EUR 6 million.
Economics Minister Dana Reizniece-Ozola says that small and medium companies are an important pillar of Latvia’s economy. “Development of companies also means growth for the country, and so I welcome this Citadele initiative to help retailers and manufacturers to develop their operations, and I also welcome the bank’s initiatives in terms of business loans,” she says. “The Economics Ministry plans to continue successful support programmes for companies in 2016, including those in which banks participate. The Altum developmental financial institutions, for instance, has set a good example for successful ways for the government to work with companies, and we will continue to do so next year. Development of SMEs is one of or key priorities, and investments have been successful in that SMEs have represented more than 80% of GDP growth during the last few years.”
“Shareholders and managers at the Citadele Bank believe that the bank’s development will involve more loans for companies, particularly small and medium ones,” says Citadele Bank board chairman Guntis Beļavskis. “During the first three quarters of this year we issue 286 corporate loans with a sum of more than EUR 87 million, and most of the loans went to the retail, industrial and agricultural sectors. Citadele’s new strategy involves the development and implementation of new financial services, and soon we plan to make a similar offer to manufacturers and farmers so as to make financing more available to Latvian companies.”
“Financing for Retailers” will be available to companies in the retail and services sectors that allow clients to pay with payment cards. The director of the Citadele Bank’s Small and Medium Business Services Division, Ieva Vērzemniece, explains that “the maximum sum will be 200% of the monthly POS terminal revenues, with a limit between EUR 1,000 and 20,000. We developed this product so as to make it easier for companies in this sector, and this time no collateral is needed.”
One of the first companies to take advantage of the new service is the manufacturing and retail company Ciemakukulis. Owner and manager Gatis Gasons says that the financing offers quick and easy resources for the company’s development: “We launched our business because we wanted to make our environment better and more enjoyable. We delight hundreds of people each day with high-quality and tasty things, and our idea is supported by many residents in Pārdaugava. Our brand’s companies have revenues of more than EUR 500,000 a year, which means that we are appreciated, but we also see areas in which to develop further.”
The “Financing for Retailers” programme was tested on a pilot basis in the autumn, with Citadele issuing 56 loans for a total sum of EUR 431,000. The result is a simple and unified financing solution for all kinds of companies. More than one-half (57%) of the loans during the pilot project went to companies outside of Rīga, and the plan is to ensure that there is interest in this instrument throughout Latvia.
The board chairman of the Latvian Chamber of Commerce and Industry, Jānis Endziņš, says that retailers, unlike businesspeople in other sectors, do not have access to a series of support mechanisms such as EU funds. For that reason, the opportunities created by Citadele and other banks are commendable, because the services are adapted to the specific groups and niches of companies. “It’s quite hard for the retail sector to work and develop at this time,” says Endziņš. “The demographic situation is causing a decline in the market, as well as harsher competition. We can develop the domestic market if government aid is focused on enhancing export and productivity, and eventually that will improve the purchasing power of local residents. In the near future, the whole sector will be affected by the amendments that were adopted in mid-December about technological requirements for cash registers. That will clearly be an additional burden for retail firms next year.”