The funding options of entrepreneurs are improving thanks to industry loans


As of today, KredEx will offer an industry loan which helps industrial enterprises to finance their investments in tangible and intangible assets. The reason for changing the service that was previously called a technology loan was the feedback from entrepreneurs who wish to develop their production while also investing in intangible assets such as software or development expenditures.


The Minister of Entrepreneurship and Information Technology, Urve Palo, said that the development of the national industry loan was based on a thorough market study. This included surveying 750 entrepreneurs and researching their financing requirements. The number of enterprises in need of additional financial resources is the biggest amongst processing industries, of which approximately 70% feel the need for additional financing.

"The state’s support of industrial entrepreneurs is very important and I consider the industrial sector to be one of the most important parts of my portfolio. So far, the processing industry of Estonia could apply for the financing of investments in new technological solutions. At the same time, entrepreneurs outside of Tallinn and Tartu have had difficulties receiving a loan for the establishment of industrial buildings. Therefore, we have decided, as one of the innovations by the state, to help to finance that important expense as well," said Palo describing the new industry loan opportunities of KredEx.

According to the Head of the Enterprise Division of KredEx, Jarmo Liiver, the financial services provided to the entrepreneur have to meet their current needs. Since the changing market is constantly offering new challenges, the services provided to the enterprise need to be changed accordingly. "If the need to include additional capital in the perspective of the next three years remained at the same level according to entrepreneurs, then the purpose of the use of financial funds is changing. In regard to the digitalisation of enterprises, the need for investment in intangible assets and information technology has increased, and therefore also the terms and conditions of the industry loan", said Liiver.

Industry loan is a subordinated debt and it is of help if a bank loan or leasing is to be used for making the investment, however the entrepreneur lacks the capital for the required self-financing. The amount of the industry loan is 2 million euros but no more than 40% of the value of the financed project. The advantage of the industry loan is a very long grace period, low interest and the fact that enterprises are not usually required to give a guarantee. The industry loan is designed for entrepreneurs of the processing industry, mining industry, production, transfer and distribution of electrical energy and circular economy.

A possible example of the use of an industry loan:

  • The industrial enterprise wishes to buy a production instrument with a value of 800,000 euros.
  • KredEx's industry loan can finance 20% of the investment, 70% can be financed by leasing and 10% is self-financing of the enterprise (it would also be possible to finance in a way that, for example, KredEx's part is 30%, leasing is 70% and the self-financing of the enterprise is 0%).
  • If KredEx finances up to 20% of the project's value, the interest on KredEx's industry loan is exactly the same as the interest on the leasing.
  • The leasing period is, for example, 88 months, including a grace period of 4 months. The maturity of the KredEx industry loan is in this case 111 months, including a grace period of 88 months.
  • The guarantee of the leasing is the instrument to be purchased; in the case of an industry loan, a guarantee is not required.