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News
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03.10.2006
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Since today, October, 3 it is possible for the Estonian small-scale and medium companies to obtain an unsecured capital loan from KredEx. It is a totally new course of action for KredEx, for the foundation has thus far issued no loans.
Capital loan is a loan for companies that have been active for a while, are successful and developing fast and in need of additional capital to enlarge their activities, but do not meet the criteria for getting a bank loan of a required size.
According to Andrus Treier, the CEO of KredEx, the companies are at a sudden boost of marketing volumes in need of capital where the content of the investments made and costs cannot be determined single-handedly and regular bank products are not suitable or do not cover the need that has emerged. Also the reluctance of the entrepreneurs to include external investors, who would reduce the decision-making power of the so far active owners, is well known.
Similarly to a company owner, KredEx gives capital to the disposal of the entrepreneur, without demanding any security for it. At the same time there is no intervention to the company management as a rule. As a capital loan must be generally returned at the end of the loan period, in the eyes of the bank the capital loan increases also conditionally the equity capital of the company that in its turn enables the company to take an additional bank loan and develop fast. In order to obtain a loan, first of all the company leadership and owners are a decisive factor, who should be experienced in their field and able and willing to invest additionally in the company in case of hardships. The purpose of a capital loan can be merging of companies, takeover, acquiring the share in a company by the management members, developing new products and other analogical activities.
Namely the fast developing companies, who have reached the so-called second phase of the company development cycle, where it is necessary to invest more into research and development activity, products development or finance the business extension plans, its entrance to new markets or market segments for further boost in growth, are in need of increasingly more additional capital. All that demands already big investments and as a rule insufficient collateral security (e.g. equipment and facilities are often already pledged or their value is insufficient for sums needed for expansion) makes financing difficult. Also the low level of self-financing, being insufficient in the eyes of the bank for issuing the loan, is often a hindrance.
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