Citadele launches the Business Loan, its third product within the scope of loan series designed for small businesses’ needs. Unlike traditional corporate loans, Business Loans will be issued without property pledges. Additionally, accelerated procedures will be applied for issuing these loans, i.e. applications will be reviewed within five days after submission.
Loan sums may vary between EUR 1'000–20'000. The maximum loan sum may be up to 100 % of the applicant company's average monthly turnover in the past year. Business Loans are available for existing clients of Citadele Bank as well as clients of other banks, and they are available for all types of businesses. Business Loans also feature a simplified assessment procedure: the key principle the bank applies when assessing applications is VAT declarations, or bank account statements. The annual interest rate is 19 %, and loans are issued for one year, with an option of extending them. Traditionally, larger loan sums are issued applying lower rates, however requesting collaterals.
The Business Loan is the third product of Citadele's Support Loan Group. Support loans were designed especially to promptly provide assistance to small and medium enterprises, and farmers in their routine business operations, sparing them of complicated procedures. Businesses do not need to mortgage their property to receive this type of financing. “Our Support Loans are aimed at financing all types of businesses, offering even small sums,“ explains Ieva Vērzemniece, Head of Citadele Bank's Small and Medium Enterprise Services Division.
Citadele Bank introduced the first Support Loan type in December 2015. This type is called the Merchants' Loan, and it is tailored for small enterprises representing the trade sector: shops, cafes, beauty salons, and other businesses where clients can pay for services using their payment cards.
The next product, the Farmers' Loan, was launched in April 2016. The key task of the support loan introduced in collaboration with the Rural Support Service was to provide farmers with assistance at moments when they suddenly encounter a need for additional investments that might not be financially intensive, yet are substantial for farmers. Such cases include the need to purchase seeds, fertilizers, fuel, repair or purchase machinery, carry out other repairs, or pay wages. Farmers' Loans are also issued on simplified conditions, on the basis of the amount of subsidies received during the past two years.
In turn, the new product, the Business Loan, is available to all businesses, even those that do not use POS terminals, and are not farmers.
Applications for Business Loans are accepted at all branch offices of Citadele, in 20 towns of Latvia, including the headquarters in Riga, at 2a Republikas Laukums. To receive a Business Loan, companies will be requested to submit their applications appended with VAT declarations for the past six months. Companies that are not registered as VAT payers will be requested to append bank account statements for the past six months to their applications.
In the corporate segment, lending to SMEs and farmers is Citadele Bank's priority. During the first three months of 2016, a total of EUR 28.8 million were granted in corporate loans. This is an increase of almost 50 % compared to the same period in 2014 when EUR 16.5 million were issued in corporate loans.