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Financing a Business in Lithuania

Today's business financing market can be divided into several sectors, each of having different borrowing or investment attraction terms and conditions.

Banks is one of the business financing sources. These business financing institutions tend to provide loans when the more substantial amount and longer terms are needed. Loans vary from 20 000 EUR, time of payment few years. At this need business can get investment cheaper, but usually all process takes much longer, a security deposit is needed, high requirements for risk assessment. However, funding conditions still remain very supportive, as final interest rates on loans for both non-financial enterprises and households remain among the lowest in the euro area. Proper, detailed research is necessary for your account manager to determine what sort of financing suits best for your future business.

Open Credit fund (OKF)creates favourable conditions for small and medium businesses in particular within the first phases of project development to get maximum 600 000 EUR per loan. To use this means individual or a company first need to approach credit establishment with which the contract is concluded.

Risk-shared loans. European Regional Development Fund finances this measure. Funds submitted to the market ensure the financing to small and medium-sized enterprises (SME) and decrease the credit risk borne faced by the manager. Maximum amount per SME is not limited, and it can be as high as 4 million EUR. To realise this financial measure RSL measure manager contributes 55 % of its funds to 45 % of the RSL loan/credit line share.

Even so young business (up to 1 year) can get resources for a business start and development.

The measure does not finance particular business sectors; there are restrictions on the company's operating period, owner's age and the process itself. Regarding its terms and risk assessment is similar to a bank lending process.

Entrepreneurship promotion. Loans under the instrument Entrepreneurship Promotion Fund 2014-2020 2 (EPF2) are granted for micro, small enterprises, natural persons or working under a business license. You can get no more than a 25 000 EUR for a maximum period of 120 months. Applications need to submit to the credit unions, members of the Lithuanian Central Credit Union (LCCU).

Risk Capital and Private Equity Companies are supporting early-stage, innovative, high-potential business projects oriented to a global market. Investment varies from several dozens to a few million EUR. Therefore preparation process can take up few years. This source of funding is not approachable for everyone as well as not acceptable for all the businessman for its specific. Investments are for a company shares and convertible debt fund.

Business angels. Company or private person is willing to invest in a chosen company part of his capital and share a personal business experience with company managers. Small and medium-sized companies with yearly income of up to 4.3 million EUR can receive this type of financing. Sales should be focused on export markets. The team must consist of active and successful executives. Minimum age of the company is 1.5-2 years. Funds investment ranges from 50 000 to 600 000 EUR.

Alternative for banks and credit unions is business loan companies with a more flexible risk assessment lend more quickly, however sometimes it' more expensive. These companies, as well as banks, are oriented in bigger companies, higher loan amount accordingly it is hardly available for smaller companies. Therefore, as an alternative, P2P financing platforms appear on the market creating more flexible conditions.

Microloans for business which finances early-stage companies up to 10 000 EUR. There is very flexible risk management in this sector, a lot of attention on a businessman and his reliability rating. This type of funding is accessible to a broader range of companies and funds can be gotten in a day. In particular when working capital funding is needed, when there's no thrift or from the economic point of view it's not necessary to include a real estate security deposit in the loan. It is also useful when equipment maintenance, raw material or product is needed.

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