KredEx improves corporate financing options

The state financing institution KredEx is changing their loan guarantee, start-up loan and credit insurance conditions to improve the financing options of start-ups and small and medium-sized enterprises.

The maximum loan guarantee amount issued to a company will be raised from EUR 2 million to EUR 5 million. Guarantee fees will also be reviewed, from now on falling between 0.4 to 3.8 per cent of the remaining sum guaranteed.

“We are raising the loan guarantee amount to support the fast development of export-oriented companies in particular. In the case of exporters planning capital-intensive investments or needing large-scale bank guarantees or circulating capital due to the specifics of their operations, EUR 2 million is not enough”, said Lehar Kütt, CEO of KredEx.

Start-up loan terms and conditions are also subject to changes. Instead of the EUR 64,000 granted until now, starting companies will be able to apply for a start-up loan in the amount of up to EUR 100,000. At the same time the personal guarantee requirement will be reduced from 40% to 25%.

“Raising the start-up loan amount will make it possible to initiate more capital-intensive projects. This is likely to concern companies in the area of production, who need to acquire machinery and prepare production facilities”, said Kütt.

Exporting companies will be given the option to insure damages arising from unpaid invoices in the case of long-term export transactions. Also, the conclusion of credit insurance for small enterprises needing a guarantee for single purchasers will be simplified.

“Credit insurance for unpaid invoices enables the companies to be bolder in their exports. A survey we conducted last year revealed that 25% of businesses believe that risks related to unpaid invoices will increase this year. Credit insurance is the most secure means of reducing damages arising from unpaid invoices. With small companies in particular, the option of applying for insurance and its availability must be as simple as possible, to ensure that no export transactions would be missed”, said Meelis Tambla, Chairman of the Management Board of AS KredEx Krediidikindlustus.

The financial instruments of Foundation KredEx and AS KredEx Krediidikindlustus are partially financed from the European structural funds.