Financing SMEs and Entrepreneurs 2024

26. Lithuania

Key facts on SME financing

Continued high inflation, tightening financing conditions and deteriorating trade prospects are slowing down Lithuania’s economic growth. With high inflation constraining consumption both in Lithuania and in export markets, the number of Lithuanian firms facing insufficient demand rose slightly in 2022, mostly in the trade and industrial sectors.

SMEs account for 99.6% of all enterprises operating in Lithuania, the majority of them (84.6%) being micro-enterprises. Most SMEs (73.2%) have chosen the legal form of private limited liability company and are primarily engaged in wholesale or retail trade activities (more than one-fourth of all SMEs). The share of employees working in SMEs is around 70%, while the share of gross value added generated by SMEs is close to 56%.

In 2022, companies borrowed very actively, mainly because of high demand for working capital driven by higher prices of raw materials and intermediate goods. These conditions have led to NFCs’ (non-financial corporations) significant short-term borrowing. However, the level of indebtedness of SMEs operating in Lithuania is relatively low and internal resources remain their main source of funding.

As a result of a decrease in demand for bank credit among large NFCs and structural changes in their loan portfolios, the share of SME loans over total business loans increased by 17 p.p. since 2019 and the level remained elevated in 2021 and 2022 (57% and 58.7% respectively).

In Lithuania, most NFC loans are granted at variable interest rates. Thus, rising key interest rates affect the majority of borrowers. However, the interest rate spread between small and large loans has been contracting since 2019, indicating that interest rate-related credit conditions began to be more accommodative to SMEs, and in 2022, the average interest rates of small loans were just 0.1 percentage points higher than for large ones. On the other hand, the surveys of commercial banks suggest that in 2022, lending standards to SMEs have tightened, although did not reach the levels of 2020. In Q1 2023, a decline in demand for corporate loans was identified by one-third of the surveyed banks.

In 2022, NFCs also borrowed extensively from each other. The peer-to-peer business loan portfolio increased by as much as 31.3% year-on-year and amounted to EUR 7 billion at the end of 2022. State aid measures and EU funds were also significant sources of finance, whereas venture capital investments have been steadily growing since 2016. In 2022, demand for alternative financing (e.g., private capital or risk funds, crowdfunding, etc.) was quite low.

The government supports SMEs by ensuring that they benefit from favourable conditions to obtain the necessary financing to start and develop their business. When a company does not have sufficient collateral, it can apply to the state-controlled enterprise UAB Investicijų ir verslo garantijos (INVEGA), which provides various options of loan guarantees, factoring, leasing and export credit repayments. INVEGA also provides an option for different preferential loans through alternative financing or crowdfunding and loans with preferential rates from the different Venture Capital funding services. In addition, municipalities provide different support schemes to SMEs; for example, when starting a business, entrepreneurs can expect support to cover their set-up costs, part of the interest payments, as well as other support. To reduce the impact of the crisis caused by the large-scale aggression of Russia against Ukraine, direct loans to business entities affected by the war have been introduced.

Table 26.1. Scoreboard for Lithuania

Indicator		Unit		2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
			Debt
Outstanding business loans, SMEs		EUR million		..	..	..	..	..	..	..	3 143	3 231	3 404	3 723	3 920	3 670	4 390	4 790	5 790
Outstanding business loans, total		EUR million		8 409	9 864	7 978	6 816	6 906	7 047	6 828	7 530	7 610	8 310	8 830	9 250	8 700	7 400	8 400	9 870
Share of SME outstanding loans		% of total outstanding business loans		..	..	..	..	..	..	..	41.74	42.44	40.91	42.13	42.38	42.18	59.41	57.02	58.66
New business lending, total		EUR million		10 420	6 395	2 084	2 764	3 761	4 560	4 745	4 799	3 994	3 966	4 836	4 442	3 777	3 000	4 803	5 326
New business lending, SMEs		EUR million		8 996	4 336	1 330	1 892	2 452	2 948	3 206	3 075	2 398	2 731	2 948	2 628	2 284	2 022	3 356	3 481
Share of new SME lending		% of total new lending		86.33	67.80	63.84	68.46	65.19	64.65	67.56	64.07	60.05	68.85	60.97	59.16	60.48	67.40	69.87	65.36
Share of short-term SME lending		% of total SME lending														22.44	22.45	19.87	19.15
Government guaranteed loans, SMEs		EUR million										148.4	218.8	241.6	224.5	188.7	257.7	315.8	356.8
Non-performing loans, total (NFCs)		% of all business loans		..	..	..	..	..	..	..	10.31	6.25	6.25	5.04	4.05	2.95	3.52	1.74	1.48
Non-performing loans, SMEs		% of all SME loans		..	..	..	..	..	..	..	17.54	14.11	11.18	8.59	6.60	4.83	4.88	2.16	1.87
Interest rate, SMEs		%		6.13	6.72	5.06	4.64	5.04	4.04	3.45	3.27	3.13	2.76	2.80	3.29	3.30	3.17	2.89	3.50
Interest rate, large firms		%		5.70	6.27	4.32	3.90	4.17	3.24	2.74	2.66	2.35	2.18	2.16	2.56	2.91	2.81	2.60	3.40
Interest rate spread		% points		0.43	0.45	0.74	0.74	0.87	0.80	0.71	0.61	0.78	0.58	0.64	0.73	0.39	0.36	0.29	0.10
Colalteral, SMEs		% of SMEs needing collateral to obtain bank lending								69.80	62.10	69.00	64.50	64.40	67.70	69.90	61.20	38.90	67.30
Percentage of SME loan applications		SME loan applications/ total number of SMEs												36.33	27.10	27.70	26.72	41.67	42.12
Rejection rate		1-(SME loans authorised/ requested)		..	..	..	..	15.4	30.8	11.5	21.3	14.3	19.4	22.5	43.2	43.8	43.49	34.76	38.28
			Non-bank finance
Venture and growth capital		EUR million													178	159	39	391	339
Venture and growth capital (growth rate)		%, Year-on-year growth rate														-10.7	-75.2	892.4	-13.3
Leasing and hire purchases		EUR million		..	..	..	1 756	1 547	1 452	1 527	1 521	1 660	2 111	2 463	2 950	3 000	2 810	3 000	3 410
Factoring and invoice discounting		EUR million		..	..	..	151	200	231	348	359	407	434	517	464	453	220	338	429
			Other indicators
Payment delays, B2B		Number of days		..	..	..	..	..	..	..	..	..	..	3	3	2	16	12	12
Bankruptcies, SMEs		Number		606	957	1844	1637	1274	1401	1554	1686	1983	2741	2979	2091	1609	790	808	1193
Bankruptcies, SMEs (growth rate)		%, Year-on-year growth rate		..	57.9	92.7	-11.2	-22.2	10.0	10.9	8.5	17.6	38.2	8.7	-29.8	-23.1	-50.9	2.3	47.6

Source: See Table 26.2.

Macroeconomic and financing conditions

Continued high inflation, tightening financing conditions and deteriorating trade prospects are slowing down Lithuania’s economic growth and increasing the likelihood of significant economic shocks. The June 2023 projections of the Bank of Lithuania forecast the economy to shrink by -1.3% in 2023 and grow by 2.7% in 2024. The war launched by Russia has had a particularly strong impact on energy prices, which have pushed up inflation to one of the highest rates in the Euro Area, averaging 18.9% in 2022. Inflation has eased considerably in the first half of 2023 but remains elevated at 8.2% in June 2023. In Lithuania, most NFC loans are granted at variable interest rates. Thus, rising key interest rates affect the majority of borrowers. These rising key interest rates in addition to growth in other costs, mean borrowers face higher debt servicing costs, which may make it more difficult for businesses to meet their financial obligations to credit institutions and other companies. It may also lead to increases in their credit losses.

In order to contain high inflation, the central banks around the world have raised interest rates. With rising interest rates, tighter financing conditions and uncertainty, the financial environment in Lithuania, as is the case in the Euro Area as a whole, has entered a slowdown. As the importance of MFI (monetary financial institution) loans in financing of NFCs registered a long-term downward trend, NFCs borrowed more from each other, both for short and longer periods. With high inflation constraining consumption both in Lithuania and in export markets, the number of Lithuanian firms claiming to face insufficient demand rose slightly in 2022, but overall real turnover of firms continued to increase, albeit at a slower pace in key sectors. The number of firms claiming to face insufficient demand increased significantly from 24% in November 2021 to 32% in March 2022 and continued to increase throughout 2022 to 35%. The year-on-year increase in the number of firms claiming to face insufficient demand was most pronounced in the trade (from 21% in December 2021 to 34% in December 2022) and industrial (from 27% to 48%) sectors. With the rapid increase in the price of raw materials, energy and labour, as well as the end of state’s pandemic financial assistance, the number of firms claiming to face financial difficulties continued to increase significantly in 2022, growing from 9% at the end of 2021 to 21% at the end of 2022 (with the exception of the services sector, which saw a slight decline). The number of insolvencies has also increased, but the level of non-performing loans slightly declined and remained at historically low levels1.

Increased working capital needs have led to NFCs’ significant short-term borrowing from other companies, resulting in rising corporate indebtedness and worsening debt burdens, but the overall financial indicators of companies remain sustainable. Short-term corporate liabilities increased faster than current assets, but total corporate financial assets grew faster than total corporate liabilities (growth of EUR 12 billion and EUR 10.5 billion, respectively). With rapid corporate borrowing and rising interest rates, corporate indebtedness has been rising and is returning to pre-pandemic levels (total debt-to-GDP ratio of 42% in Q3 2022), while the debt burden has increased to historical highs (debt service-to-profit ratio rising to 40% in Q3 2022).

SMEs in the national economy

SMEs account for a vast majority of all enterprises operating in Lithuania. According to Statistics Lithuania, 100 045 SMEs operated in Lithuania at the beginning of 2023, which accounts for 99.6% of all enterprises in the country. This number grew by around 53% over the past ten years, but its share of total enterprises remained broadly unchanged. The majority of SMEs are micro-enterprises (84.6%). Over a decade, the number of micro-enterprises increased by almost 67%, and their share among all SMEs grew by 7 percentage points.

SMEs remain the most significant contributor to the domestic economy, creating almost 56%2 of gross value added and contributing to half (51%) of domestic exports of goods. In 2021, SMEs employed about 70% of all persons employed in Lithuania. SMEs are largely concentrated in the trade sector. Slightly more than a fifth of all SMEs operate in the retail and wholesale sectors, and the share of employees’ accounts for around 22% of all SME employees. The manufacturing, construction, and transport sectors are also relatively large, as SMEs in these sectors employ about 19.5%, 13%, and 12% of the total workforce respectively. The share of other economic branches is much smaller.

SMEs are playing a great role in investments as well. In 2021, SMEs’ investments amounted to 66% of all tangible investments among enterprises. Even though from 2017 to 2021 SMEs total investment has increased by 84%, the SMEs role in total investment is decreasing: this share has decreased by 6 percentage points in the same period.

Table 26.2.  Distribution of firms in Lithuania, 2023

Class size	Number of enterprises	% Share
Micro	84 999	84.6
Small	12 549	12.5
Medium	2 497	2.5
Large	443	0.4

Source: Statistics Lithuania.

SME lending

The portfolio of loans to NFCs grew at an annual rate of 17.7% at the end of 2022. Corporations borrowed very actively in 2022, mainly because of the demand for working capital driven by higher prices of raw materials and intermediate goods. However, in the last months of 2022, the pace of lending to the private non-financial sector started to slow down significantly due to rising interest rates, uncertainty and worsening expectations, with lending to the manufacturing sector slowing down the most. In this respect, lending trends in Lithuania are in line with the general financial cycle in the Euro zone, where loan portfolio growth rates are also slowing down.

The level of indebtedness of SMEs operating in Lithuania is relatively low. As of 2021, the ratio of SMEs liabilities to assets accounted for 52% and remained broadly unchanged. According to the NFCs survey results, using internal funds remains the most popular source of operation funding for SMEs. In 2022, about 37% of all enterprises stated that they were using internal resources as their main source of funding (e.g., more than 60%), while another 15% identified it as a significant source of funding (e.g., 40–60% of funding).

As for external sources of funding, SMEs most frequently choose trade payables, loans from other NFCs and other non-bank sources to finance their activities3. Nevertheless, lending to SMEs plays an important role for banks operating in Lithuania. By the end of 2019, loans given to SMEs accounted for 42% of the total portfolio of loans to non-financial enterprises. This level grew by 17 p.p. in 2020 and remained elevated in 2021 and 2022 (57% and 58.7% respectively). This growth was determined not only by lower demand of loans from big companies but also some structural changes in NFCs loan portfolio. As soon as the first quarantine started in Lithuania, the NFCs borrowing was rather sluggish: while SMEs portfolio was rather stable a higher decrease was noticeable in bigger enterprises portfolio. The drop in NFCs loan portfolio in 2020 was mainly driven by uncertainty, postponed investments, sales of reserves and state support measures.

Credit conditions

After the 2008-09 global financial crisis the interest rate spread between new small and large loans deviated around 0.6–0.8 percentage points. However, since 2019 this difference started contracting and in 2022 the interest rates of small loans (< EUR 1 million) were just 0.1 percentage points higher than for large loans (> EUR 1 million), 3.50% and 3.40% respectively. This convergence could be partly attributed to the fact that SMEs have a wide range of state support available (e.g., government loan guarantees), which can decrease their credit risk. Another contributing factor could be a slight decrease in the level of concentration in the lending to SME segment in conjunction with the increasing involvement of smaller market participants in the credit market over the past few years.

The surveys of commercial banks operating in Lithuania (BLS)4 suggest that in 2022, lending standards to SMEs have been tightened, although did not reach the levels of 2020. In Q1 2022, in the wake the large-scale aggression of Russia against Ukraine, the banks tightened their standards due to change in the banks’ perception of risk. Therefore, since Q3 2022, banks report that the share of rejected loan applications have been increasing slightly for SMEs. Q1 2023 BLS suggests that for the accommodation and catering services sector, which experienced the hardest hit by the pandemic, banks are still largely restricting lending due to the perceived poor state of this sector, although the share of banks imposing such restrictions slightly decreased from Q4 2022. The financial outlook of businesses continued to be gloomier compared to the first half of 2022, with real estate, construction, and manufacturing firms having the weakest assessment by banks. In Q1 2023, a decline in demand for corporate loans was identified by one-third of the surveyed banks. The decline was mainly driven by a decrease in demand for investment and working capital and a rise in the general level of interest rates.

As businesses recovered from the pandemic, around 55% of non-financial enterprises surveyed by the Bank of Lithuania in 2022 stated that lending to them is fully or partially limited. The share has dropped from 63% in 2021 but is still higher than it was before the pandemic (48% in 2019). The share of firms facing limited lending is similar across all sizes of enterprises: 59% of medium-sized enterprises, 56% of large enterprises and 51% of small enterprises. Firms find it more difficult to borrow for working capital (27%) than for long-term (10%) or short-term (7%) investment. Interestingly, in 2022 large companies saw a greater share of their applications rejected or granted under not fully satisfactory conditions than the SMEs, although in 2020 smaller companies were more likely to have such results. The survey indicates that the main reason for the lack of access to finance is the poor financial situation of companies.

Alternative sources of SME financing

Although the rise in interest rates in the second half of 2022 put a halt on borrowing from credit institutions, the overall level of financial liabilities continued to increase, mainly due to business-to-business lending. In 2022, companies borrowed more from each other, both for short and longer periods. The peer-to-peer business loan portfolio increased by as much as 31.3% year-on-year and amounted to EUR 7 billion at the end 2022.

SMEs operating in Lithuania mainly tend to use traditional funding measures, i.e. own funds, trade credits, loans and financial leasing. More than half of the companies do not use loans from financial institutions at all, the main reason being a reluctance to borrow. Companies also indicated that state aid measures and EU funds were also very significant sources of finance. 2019 survey results indicated that a third of micro-enterprises and a quarter of small enterprises experienced a need for alternative funding sources. However, in 2020, during the pandemic, the need was only 10% among SMEs and decreased to less than 2% in 2022. On the other hand, around 10% of firms identify a lack of state aid and another tenth a lack of instruments as a barrier for long-term investment. In 2022, companies planned to increase their financing through state aid measures over the next 12 months, with the most significant decrease in loans from credit institutions. This partly reflects companies' expectations that the state will provide financial assistance to business in the face of high energy prices as well as their reluctance to take on additional financial liabilities in a context of high inflation and rising interest rates.

Venture capital (VC) investments have been steadily growing since 2016. Due to economic disruptions caused by the pandemic, the flow of new VC investments has dropped significantly in 2020. Nevertheless, despite poor investment environment, Lithuanian companies managed to attract around EUR 340 million of investments in 2022. While the investment flow has declined in 2022 compared to 2021, the 2021 level was inflated by one company’s historically large investment round, raising EUR 250 million.

Table 26.3. Venture capital investments by investment stages in Lithuania, 2015–2022 (millions of euros)

Investment stage	2015	2016	2017	2018	2019	2020	2021	2022
€0—1.0m (pre-seed)	9.0	3.8	3.7	7.7	12.0	12.4	24.0	17.4
€1.0—4.0m (seed)	2.5	1.0	14.3	10.5	18.8	19.8	25.5	12.5
€4.0—15.0m (series A)	5.9	9.8	6.4	0	0	7.3	49.6	36.5
€15.0—40.0m (series B)	24.5	0	0	0	0	0	41.4	31.8
€40.0—100m (series C)	0	0	0	50.0	0	0	0	241
€100—249.9m	0	0	0	110	128	0	0	0
€250m+	0	0	0	0	0	0	250	0
Total	42	14.6	24.3	178	159	39.4	391	339

Source: Startup Lithuania Dealroom database.

Other indicators

In 2022, the number of bankruptcy proceedings (1193) grew by nearly 48% compared with 2021 (808) but remains significantly lower than pre-pandemic levels. This increase was expected as government measures introduced since the beginning of the pandemic have largely expired or have to be repaid. Historically, almost all of the bankruptcies (more than 99%) are experienced by SMEs.

An analysis of the sensitivity of companies to macroeconomic shocks carried out by the Bank of Lithuania in Financial stability review of 2023 indicates that companies in the accommodation and catering, transport, manufacturing and trade sectors would be the most vulnerable to a crisis scenario. NFCs operating in these sectors are vulnerable to shocks to turnover or expenditure, likely being the firms with the highest job losses in a crisis scenario. Micro and small enterprises, which account for more than 90% of all vulnerable companies, would be the most affected by economic shocks. However, the credit of vulnerable companies represents a small share of the total credit of non-financial corporations, therefore, in the event of a significant increase in the number of bankruptcies of such companies, the impact on the financial sector would remain limited. The impact on corporate credit risk in this scenario would still be relatively low due to accumulated reserves, better preparedness of the financial sector and the buffers put in place after the previous crisis.

Historically, SMEs used to have a higher share of non-performing loans (NPLs) in bank loan portfolios due to their higher risk profiles. At the end of 2020, the share of NPLs granted to SMEs amounted to 4.9%, while the total NPL ratio amounted to only 2.2% (3.5% for non-financial enterprises). However, the difference has been decreasing steadily and at the end of 2022 the share of SME loan NPLs was just 1.9%, with the total NPL ratio dropping to 0.9% (1.5% for non-financial enterprises). At the end of 2022, the highest share of NPLs was recorded in accommodation and catering services as well as construction sectors (9.2% and 7.6% respectively). As a result, the former are currently facing restricted lending from credit institutions.

Government policy response

Open Credit Fund 3 (OCF3)

 

Name of the programme: Open Credit Fund 3 (OCF3)

Start date: 2023-06-12                                                             End date: NA

Objectives: To offer access to project finance on favourable terms at below-market prices to start up a new business or maintain and expand an existing one.

Source of funding: EUR 85.1 million of the funds repaid and/or to be repaid to the INVEGA fund.

Delivery agents and type: National development institution INVEGA through the financial intermediaries.

Main targeted beneficiaries (eligibility criteria): Loans are available to businesses of all sizes.

Financing terms: There is no limit for the maximum amount of the loan. The share of OCF3 per one loan must not be more than 75%, and in any event may not be more than EUR 750 thousand. The share of the financial intermediator’s own funds per one loan must be at least 25%. Maximum loan interest: 3 months EURIBOR + financial intermediary’s margin up to 3%. Financing in the form of loan and lease will be provided for a maximum period of 120 months. Financing in the form of line of credit will be provided for a maximum period of 36 months. Financing in the form of line of credit may be converted into a loan by extending the term of the loan agreement by up to 60 months. Soft loans are offered to finance investments or working capital. OCF3 funding may be provided in the form of a loan, line of credit and financial lease.

Programme termshttps://outlook.office.com/mail/inbox/id/AAMkADRiZTgyNjZlLWMzYTYtNDlhMC04OTBmLWJjMDI5M2Q2YjUzMABGAAAAAADi9ewARJRvSqEhhJVABY76BwB%2Bnu1pdWdCSohf%2F4wYXqN1AAAAGwqtAABUA5TMNJf1Rbba2%2F5KyrOyAANvlIs7AAA%3D - x_x_x_x__ftn4: Financial intermediary  assumes all the credit risk related to the lending of funds of OCF3 to the borrowers, i.e. financial intermediary must return all the received funds of OCF3 to the INVEGA fund.

Relevant link to the programme website (if available): https://www.invega.lt/en/business/business-start/soft-loans/167/open-credit-fund-3-140#descriptionEnterpriseUsual

Similar local or regional programmes (if independent)https://outlook.office.com/mail/inbox/id/AAMkADRiZTgyNjZlLWMzYTYtNDlhMC04OTBmLWJjMDI5M2Q2YjUzMABGAAAAAADi9ewARJRvSqEhhJVABY76BwB%2Bnu1pdWdCSohf%2F4wYXqN1AAAAGwqtAABUA5TMNJf1Rbba2%2F5KyrOyAANvlIs7AAA%3D - x_x_x_x__ftn7: no

Alternative financing for SMEs Alternatyva

 

Name of the programme: Alternative financing for SMEs Alternatyva

Start date: 2020-04-17                                                             End date: NA

Objectives: To enable SMEs to obtain the necessary financing for their business through alternative finance providers.

Source of funding: EUR 91 million state budget resources.

Delivery agents and typehttps://outlook.office.com/mail/inbox/id/AAMkADRiZTgyNjZlLWMzYTYtNDlhMC04OTBmLWJjMDI5M2Q2YjUzMABGAAAAAADi9ewARJRvSqEhhJVABY76BwB%2Bnu1pdWdCSohf%2F4wYXqN1AAAAGwqtAABUA5TMNJf1Rbba2%2F5KyrOyAANvlIs7AAA%3D - x_x_x_x__ftn1: National development institution INVEGA through alternative finance providers.

Main targeted beneficiaries (eligibility criteria): The loans are available to small and medium-sized entities.

Financing terms: Loans may be granted to finance an SME’s investments and/or to supplement the working capital shortage provided that such financing is related to the launch of the SME’s new business activity or to the maintenance, strengthening or development of the existing activity. The largest portion of the loan, 100%, financed under the Alternatyva instrument is up to EUR 500 thousand if it is granted de minimis aid or the largest portion of the loan available under the Alternatyva instrument is up to EUR 200 thousand and no more than 90% of the loan amount is financed if the loan is granted on the market conditions. The maximum amount of the loan depends on the particular lending financial institution. A loan may be granted for a period not exceeding 24 months. Alternatyva funding may be provided in the form of loan, including factor (classic, reverse and secret) and financial lease.

Programme terms: Financial intermediary  assumes all the credit risk related to the lending of funds of Alternatyva to the borrowers, i.e. financial intermediary must return all the received funds of Alternatyva to the INVEGA fund.

Uptake by beneficiaries: - until 2023-05-31, 3597 SMEs were supported, the total loans amount is 182,15 million

Relevant link to the programme website (if available): https://www.invega.lt/en/business/business-start/soft-loans/167/alternatyva-instrument-alternative-lending-for-businesses-68

Similar local or regional programmes (if independent): no

Crowdfunding loan Aviete

 

Name of the programme: Crowdfunding loan Aviete

Start date: 2018-10-24                                                            End date: NA

Objectives: enable SMEs to borrow through crowdfunding platforms.

Source of funding: EUR 20 million of the funds repaid and/or to be repaid to the INVEGA fund.

Delivery agents and type: National development institution INVEGA through the crowdfunding platforms.

Main targeted beneficiaries (eligibility criteria): Loans are available to small and medium-sized entities.

Financing terms: A share of the state funds intended for the financial instrument Aviete loans may reach up to 40% of the loan funds in an ordinary Aviete loan, but in may not exceed EUR 30 thousand. For example, if the amount of the loan you obtain is EUR 50 thousand, a maximum share of the state fund can be EUR 20 thousand. The total amount of state fund for all valid signed agreement may not exceed EUR 30 thousand for the same borrower. Interest rate depends on the company's risk, collateral and loan duration. Loans are granted for a period not exceeding 36 months. Loans are provided to borrowers at a fixed rate, which means Aviete funds are borrowed to the recipient under market conditions, i.e. part of the borrowers' loan, financed with the funds of Aviete (no more as 40%), provided at the most suitable rate that other financiers lend.

Programme terms: The risk of the loan is assumed by the financiers of the business project. INVEGA assumes the risks related to the lending of Aviete funds for business projects.

Uptake by beneficiaries: - until 2023-05-31 2652 SMEs were supported, the total loans amount is 44.7 million (with private share).

Relevant link to the programme website (if available): https://www.invega.lt/en/business/business-start/soft-loans/167/crowd-funding-loans-aviete-64

Similar local or regional programmes (if independent): no

Risk-shared loans (RSL)

 

Name of the programme: Risk-shared loans (RSL)
Start date: 2017-10-16                                                             End date: 2023-12-31
Objectives: To help reduce the price of financing business entities. Funds provided to the market ensure the availability of financing sources to small and medium-sized enterprises and decrease the credit risk borne by the financial instrument manager. Preferential loans granted at prices lower than the normal market prices promote lending to riskier projects, business execution and development.
Source of funding: EUR 63.46 million of the 2014-2020 European Union funds and the funds repaid and/or to be repaid to the Business financing fund.
Delivery agents and type: National development institution INVEGA through the financial intermediaries.
Main targeted beneficiaries (eligibility criteria): The loans are available to small and medium-sized enterprises.
Financing terms: The maximum amount of the loan per SME is EUR 4 million, and the number of loans per SME is not limited. Funding can be provided in the form of a loan or credit line. When providing funding in the form of a loan, a loan may be granted for a period not exceeding 120 months and, in case of a credit line, for 36 months. In case of providing funding under the RSL financial instrument, 45% of the RSL loan/credit line is lent free of charge, i.e. by applying the annual interest rate of 0%, and 55% of the RSL loan/credit line is provided at the annual interest rate based on market conditions.
Programme terms: The RSL financial instrument is based on the principle of lending. To implement this financial instrument, the funds allocated to the RSL financial instrument and the private funds of the RSL financial instrument manager are used by sharing risk with the proportion of 45:55, under which the RSL financial instrument manager contributes by 55% of its own funds to 45% of the RSL loan/credit line share.
Actual cost: - until 2023-05-31, 361 SMEs were supported, the total loans amount is 121.8 million (with private share).
Relevant link to the programme website (if available): https://www.invega.lt/en/business/develop-business/soft-loans/171/risk-shared-loans-63
Similar local or regional programmes (if independent): no

Direct loans to business entities affected by the war

 

Name of the programme: Direct loans to business entities affected by the war

Start date: 2022-10-04                                                             End date: NA

Objectives: To reduce the impact of the crisis caused by the Russian Federation's military aggression against Ukraine by providing loans to the working capital of business entities, and to reduce the lack of investment loans in the Lithuanian economy caused by this crisis.

Source of funding: EUR 50 million of funds from the INVEGA fund.

Delivery agents and type: National development institution INVEGA.

Main targeted beneficiaries (eligibility criteria): Loans are available to businesses of all sizes.

Financing terms:  The borrower is considered a victim of a war-induced crisis if it meets any of the following conditions: The borrower’s share of imports and/or exports with Ukraine and/or imports with Russia and/or Belarus in aggregate is at least 15% of the borrower’s 2021 sales revenue; or The borrower’s energy costs, i.e. natural gas, heat and electricity supply, are at least 8% of the borrower’s costs in 2021; or  According to the data of the State Data Agency as of 1 January 2022, the main economic activity carried out by the borrower within the meaning of Article 2(3) of the Law on SMEs, the type code of which is indicated in the Statistical Register of Enterprises, is included in Annex I to the European Commission’s Communication of 9 March 2023, Communication No 2023/C 101/03 on ‘Temporary framework of measures of State aid to support the economy in the context of the crisis and transition in response to the aggression of Russia against Ukraine’ (the ‘Communication’). Maximum duration of working capital loan – 36 months, investment loan – 72 months. The maximum loan amount shall be calculated in accordance with the following provisions: the loan amount must not exceed 15% of the borrower's average sales revenue of the last 3 financial years; or the loan amount must not exceed 50% of the amount of the borrower's energy costs incurred in the last 12 months prior to the month of submitting the loan application; the loan amount granted to a borrower or a group of companies (if the borrower belongs to a group of companies) cannot exceed EUR 10 million. Loans are granted at a fixed annual interest rate. The interest rate of the loan is calculated according to the interest rate calculator approved by order of INVEGA’s CEO, which is prepared in accordance with the methodology for calculating the interest rate of loans granted directly by INVEGA. The interest rate on the loan will not be less than 5%.

Programme terms: Long-term is financed with the funds of the Investment loan property or other equivalent long-term assets (i.e. no less value than is financed with the funds of the Investment loan property) must be pledged in favour of INVEGA. INVEGA after completing the business entity and revolving loans non-return risk assessment, guided by INVEGA approved methodology, depending on the level of riskiness revolving loans may be subject to revolving credits. Loan collateral.

Actual cost: - until 2023-05-31 21 entities were supported, the total loans amount is 15.14 million.

Relevant link to the programme website (if available): https://www.invega.lt/en/business/business-start/soft-loans/167/direct-loans-to-business-entities-affected-by-the-war-124.

Similar local or regional programmes (if independent): no

Portfolio guarantees 3

 

Name of the programme: Portfolio guarantees 3

Start date: 2022-09-20                                                             End date: NA

Objectives: The facility facilitates access to finance for small and medium-sized enterprises (SMEs) when the security they can offer is unattractive or insufficient for a financial institution.

Source of funding: EUR 90 million of the funds repaid and/or to be repaid to the INVEGA fund.

Delivery agents and type: National development institution INVEGA through the financial intermediaries.

Main targeted beneficiaries (eligibility criteria): The guarantees are available to small and medium-sized enterprises.

Financing terms: The maximum amount of financing that can be guaranteed by the portfolio guarantee is EUR 1.875 million, or: for entities engaged in road haulage operations – EUR 937 thousand; for entities engaged in primary production of agricultural products – EUR234 thousand; for entities engaged fishery and aquaculture operations – EUR 281 thousand. The financing can be granted in the form of a credit line, loans and financial lease. Maximum term in respect of: investment loans and financial leasing – 120 months; negotiable loans – 60 months; financing in the credit line form – 36 months. A portfolio guarantee secures a repayment of 80% of a loan, credit or lease to a financial intermediary. This rate applies to each transaction included in the financial intermediary portfolio, but the total amount of INVEGA’s pay-outs cannot exceed the cap on pay-outs.

Programme terms: The guarantee provided under this instrument is not a specific guarantee of the obligations of the borrower included in the portfolio. In the sense of article 6.90 of the Civil Code of the Republic of Lithuania the provision and use of the guarantee does not change the debtor's obligations to the financial intermediary scope, content and performance conditions, i.e. F financial intermediary is obliged to carry out the collection of the debt in accordance with the entire loan for which the payment has been made actions from the borrower.

Actual cost: - until 2023-05-31 285 SMEs were supported, the total guarantee amount is 60.4 million.

Relevant link to the programme website (if available): https://www.invega.lt/en/business/develop-business/guarantees/172/portfolio-guarantees-3-121

Similar local or regional programmes (if independent): no

Individual Guarantees

 

Name of the programme: Individual Guarantees

Start date: 2001 End date: NA

Objectives: To offer solutions to unattractive or insufficient conditions and facilitate the access to the funding sources.

Source of funding: EUR 118.66 million of the funds repaid and/or to be repaid to the INVEGA fund.

Delivery agents and type: National development institution INVEGA through the financial intermediaries.

Main targeted beneficiaries (eligibility criteria): The guarantees are available to businesses of all sizes and entrepreneurs except lease guarantees which are available just for SMEs.

Financing terms: For SMEs the maximum amount of the guarantee may not exceed EUR 5 million, in the case the subjects activity is road freight transport for hire and reward – guarantee may not exceed – EUR 750 thousand. For large companies the maximum guarantee amount is EUR 1.5 million. If several guarantees have been obtained, the aggregate outstanding amount may not exceed EUR 1.5 million. For lease the maximum amount of the guarantee, including the balances of the available guarantees, shall be as follows: for small and medium enterprises operating for up to 3 years – EUR 750 thousand; for small and medium enterprises operating over 3 years – EUR 1.5 million. The guarantee amount may be up to 80% of the principal amount. Minimum proportion of own funds – 20%, intensity of guarantee 80% depending on the age of the company. In exchange for the guarantee, the borrower should pay a one-off guarantee fee, payable before the issue of the guarantee. The guarantee fee shall be determined based on the guarantee amount and the duration of the guarantee, i.e. a fixed base will be applied for the first year (months 1 to 12), and an additional annual premium will be applied for each following year. The fixed base will depend on the age of the borrower: 1% for companies aged less than 3 years; 1% for companies aged more than 3 years (in the case of a working capital loan), 1.5% for companies aged more than 3 years (in the case of an investment loan). For large companies the fixed base will depend on the age of the borrower: 2% for companies aged less than 3 years; 1% for companies aged more than 3 years (in the case of a working capital loan), 1.5% for companies aged more than 3 years (in the case of an investment loan). For lease the guarantee fee will be calculated on the basis of the guarantee amount and the duration of the use of the guarantee, i.e. a fixed base for the first year of use (1 to 12 months) and an annual charge for each subsequent year. The fixed base will depend on the lessee’s age (up to 3 years – 1%, over 3 years – 1.5%). The annual charge will be 0.2% for each additional year (i.e. 0.2% for 13–24 months, for 25–36 months, etc.).

Programme terms: According to the guarantee provided by INVEGA, INVEGA’s liability is subsidiary. In the event of a guarantee event, the recipient of the INVEGA’s guarantee acquires the right to a guarantee payment in accordance with the guarantee provided by INVEGA, only when all conditions for the provision of the guarantee specified in the INVEGA’s decision on the provision of the guarantee and in the INVEGA’s written guarantee (guarantee deed) are fulfilled and when, after the realization of the primary methods of guaranteeing the repayment of the loan, there remains unreturned (uncovered) part of the loan guaranteed by INVEGA.

Actual costhttps://outlook.office.com/mail/inbox/id/AAMkADRiZTgyNjZlLWMzYTYtNDlhMC04OTBmLWJjMDI5M2Q2YjUzMABGAAAAAADi9ewARJRvSqEhhJVABY76BwB%2Bnu1pdWdCSohf%2F4wYXqN1AAAAGwqtAABUA5TMNJf1Rbba2%2F5KyrOyAANvlIs7AAA%3D - x_x_x_x__ftn5: - until 2023-05-31 over 4368 entities were supported, the total guarantee amount is up to 584.87 million.

Relevant link to the programme website (if available): https://www.invega.lt/en/business/develop-business/guarantees/172/individual-guarantees-for-loans-78, https://www.invega.lt/en/business/develop-business/guarantees/172/guaranteed-leasing-91, https://www.invega.lt/en/business/develop-business/guarantees/172/guarantees-for-large-companies-80

Similar local or regional programmes (if independent): no

Portfolio guarantees for loans, leasing and factoring

 

Name of the programme: Portfolio guarantees for loans, leasing and factoring

Start date: 2018-06                                                             End date: NA

Objectives: To facilitate the access to funding for small and medium size enterprises (SMEs) when an SME is unable to provide a collateral that is attractive or sufficient to a financial institution.

Source of funding: EUR 87.25 million of the 2014-2020 European Union funds and the funds repaid and/or to be repaid to the INVEGA fund.

Delivery agents and type: National development institution INVEGA through the financial intermediaries.

Main targeted beneficiaries (eligibility criteria): The guarantees are available to small and medium-sized enterprises.

Financing terms: Guarantees are provided for credit lines, loans, lease or factoring transactions granted to SMEs. The maximum guaranteed amount of loan, lease or factoring is EUR 1,875 million, or EUR 937 thousand in the case of organisations involved in the carriage of freight by road. Funding under the instrument cannot extend beyond 120 months or 36 months for facility of credit limit. A portfolio guarantee secures the repayment of 80% of the principal amount of the loan, lease or factoring to a financial institution. This amount shall be applied to each transaction included in the portfolio of the financial institution. The total amount of INVEGA payments shall not exceed the maximum amount limited by the ceiling, that is 20%. Guaranteed loans, lease or factoring shall be granted only to potentially economically viable activities related to the establishment of SME, its development or strengthening or development of new projects, facilitate access to new markets or carry out new activities of companies that are already established.

Programme terms: The maximum amount of benefits paid to the manager of the facility will not exceed the amount of loans, leases or factoring included in the portfolio and disbursed, multiplied by the amount of the guarantee (80%) and the rate of the upper limit of the guarantee (20%).

Actual cost: - until 2023-05-31 3054 SMEs were supported, the total guarantee amount is 403.9 million.

Relevant link to the programme website (if available): https://www.invega.lt/en/business/develop-business/guarantees/172/portfolio-guarantees-for-loans-72, https://www.invega.lt/en/business/develop-business/guarantees/172/portfolio-guarantees-for-lease-transactions-71, https://www.invega.lt/en/business/develop-business/guarantees/172/portfolio-guarantees-for-factoring-transactions-74, https://www.invega.lt/en/business/develop-business/guarantees/172/portfolio-guarantees-for-factoring-transactions-2-75

Similar local or regional programmes (if independent)https://outlook.office.com/mail/inbox/id/AAMkADRiZTgyNjZlLWMzYTYtNDlhMC04OTBmLWJjMDI5M2Q2YjUzMABGAAAAAADi9ewARJRvSqEhhJVABY76BwB%2Bnu1pdWdCSohf%2F4wYXqN1AAAAGwqtAABUA5TMNJf1Rbba2%2F5KyrOyAANvlIs7AAA%3D - x_x_x_x__ftn7: no

Export credit guarantees

 

Name of the programme: Export credit guarantees

Start date: 2018                                                             End date: NA

Objectives: The export credit guarantees provided by INVEGA enable companies to expand their export markets in countries with non-marketable risk and increase export volumes by minimizing the potential risk of customer insolvency.

Source of funding: EUR 17 million of the funds repaid and/or to be repaid to the INVEGA fund.

Delivery agents and type: National development institution INVEGA.

Main targeted beneficiaries (eligibility criteria): The guarantees are available to businesses of all sizes. The guarantees could be issued for the export of goods and/or services of Lithuanian origin to enterprises that have been operating for more than one year with an annual income of over EUR 100 thousand according to the approved annual financial statements for the past financial year.

Financing termshttps://outlook.office.com/mail/inbox/id/AAMkADRiZTgyNjZlLWMzYTYtNDlhMC04OTBmLWJjMDI5M2Q2YjUzMABGAAAAAADi9ewARJRvSqEhhJVABY76BwB%2Bnu1pdWdCSohf%2F4wYXqN1AAAAGwqtAABUA5TMNJf1Rbba2%2F5KyrOyAANvlIs7AAA%3D - x_x_x_x__ftn3: The maximum amount of all export credit guarantees per one exporter cannot exceed EUR 2 milion. The maximum amount of all export credit guarantees per one buyer chosen by the exporter cannot exceed EUR 750 thousand. The aggregate of all export credit guarantees per one buyer across all exporters cannot exceed EUR 2 million. Goods and services must be exported to non-marketable risk countries. The upper limit of liability assumed by INVEGA (guarantee rate) shall be no more than 90% of the aggregate of all deferred payments. A fee payable for the export credit guarantee will depend on the risk profile of a foreign buyer, risk group of the country of destination and the due date of deferred payments. The term of deferred payments cannot extend beyond 2 years. The exemption applies to agricultural products for which the deferred payment period may not exceed 18 months according to the World Trade Organization Nairobi Decision on Export Competition. The time frame for raising invoices (the term within which the beneficiary of the guarantee may raise invoices for deliveries to buyers with a deferred payment option) cannot extend beyond 1 year.

Programme terms: A report of a guarantee event (default in part or in full on a deferred payment by the due date of the deferred payment, or in the case of a private buyer bankruptcy) shall be submitted within 60 calendar days from the due date of each deferred payment stated on the invoice. Within 10 calendar days from the date of the guarantee event report the beneficiary of the guarantee has to enter into an agreement with a debt collection agency for the recovery of deferred payment debt from the buyer.

Actual costhttps://outlook.office.com/mail/inbox/id/AAMkADRiZTgyNjZlLWMzYTYtNDlhMC04OTBmLWJjMDI5M2Q2YjUzMABGAAAAAADi9ewARJRvSqEhhJVABY76BwB%2Bnu1pdWdCSohf%2F4wYXqN1AAAAGwqtAABUA5TMNJf1Rbba2%2F5KyrOyAANvlIs7AAA%3D - x_x_x_x__ftn5: - until 2023-05-31 170 entities were supported, the total export guarantee amount is 9.73 million.

Relevant link to the programme website (if available): https://www.invega.lt/en/business/develop-business/guarantees/172/export-credit-guarantees-77

Similar local or regional programmes (if independent): no

Venture Capital instruments (8 of venture capital funds are still investing)

 

Name of the programme: Venture Capital instruments (8 of venture capital funds are still investing)

Start date: 2012                                                             End date: NA

Objectives: To invest into the activities of scientific research and development and innovation in smart specialisation priority sectors, to increase capital availability to new prospective companies that have limited access to business financing offered by banks, to invest in micro and small enterprises and provide mentoring, training and consulting services to such enterprises, to invest into innovative companies in the field of defence and security.

Source of funding: EUR 153.3 million of the 2014-2020 European Union funds and of the funds repaid and/or to be repaid to the INVEGA fund.

Delivery agents and type: National development institution INVEGA through the selected funds managers or its subsidiary company in case of Co-investment Funds.

Main targeted beneficiaries (eligibility criteria): The venture capital investments are available to small or medium size enterprises except Baltic Innovation Funds where small midcaps are also available.

Financing terms: The investment strategy depends on each selected fund manager. Currently there are funds of various stages, from the acceleration fund to the development fund or the Baltic innovation funds, which focus on various groups of companies and their stages (from the earliest to the latest). Some funds are focused on the activities of scientific research and development and innovation in smart specialisation priority sectors, some on increasing capital availability to new prospective Lithuanian companies that have limited access to business financing offered by banks, accelerator funds are designed to invest in micro and small enterprises and provide mentoring, training and consulting services to such enterprises, while Defence Investment Fund will invest in innovative companies in the field of defence and security.

Programme terms: Usually the state takes 4-6 percent of hurdle rate from investments, the rest profit of the exits go to private investors and fund managers except Baltic Innovation Funds and Business Angel Fund where the returns are shared on pari passu basis.

Actual cost: - until 2023-03-31 into 468 entities were invested, the total investments amount is 638.32 million.

Relevant link to the programme website (if available): https://www.invega.lt/en/business/business-start/venture-capital/170/accelerator-2-101, https://www.invega.lt/en/business/business-start/venture-capital/170/business-angels-co-investment-fund-47, https://www.invega.lt/en/business/business-start/venture-capital/170/co-investment-fund-43, https://www.invega.lt/en/business/business-start/venture-capital/170/co-investment-fund-ii-44, https://www.invega.lt/en/business/business-start/venture-capital/170/early-stage-and-development-fund-ii-49, https://www.invega.lt/en/business/business-start/venture-capital/170/milinvest-42, https://www.invega.lt/en/business/grow-business/venture-capital/177/development-fund-ii-51, https://www.invega.lt/en/business/grow-business/venture-capital/177/baltic-innovation-fund-52, https://www.invega.lt/en/business/grow-business/venture-capital/177/baltic-innovation-fund-ii-53.

Similar local or regional programmes (if independent): no

Compensation of loan interest

 

Name of the programme: Compensation of loan interest

Start date:  Second quarter of 2020                                                           End date: NA

Objectives: Enterprises or entrepreneurs can recover part of the funds for the interest paid on the loan and allocate these funds to other business needs.

Source of funding: according to the needs, funds are allocated annually from the state budget.

Delivery agents and type: National development institution INVEGA.

Main targeted beneficiaries (eligibility criteria): The compensations are available to small or medium size enterprises.

Financing terms: Applications submitted from 1 March 2023 onwards will be reimbursed up to 50% of the amount of interest actually paid, up to a maximum of 7% per annum. Where the reimbursement is for a loan taken out for an electric car, the reimbursement will be for a maximum of EUR 35 thousand including VAT on the loan. Where the reimbursement is granted for a loan taken out for the purchase of a commercial vehicle (class N1), the reimbursement shall be for a maximum of EUR 25 thousand including VAT. The maximum period for which interest can be reimbursed is 36 months. The interest reimbursement period may not exceed 36 months from the first day of the month following the month in which the application is submitted to INVEGA and may not exceed the end of the repayment term specified in the loan agreement.

Programme terms: Compensation may be granted within the limits of de minimis aid. The total amount of de minimis aid granted to any one undertaking during any period of three financial years must not exceed EUR 200 thousand (or EUR 100 thousand in the case of road haulage activities).

Actual cost: - until 2023-05-31 8846 SMEs were supported, the total amount compensated is 47.5 million.

Relevant link to the programme website (if available): https://www.invega.lt/en/business/business-start/global-grants/169/compensation-of-loan-interest-56.

Similar local or regional programmes (if independent): no

Promotion of listing of securities on the stock exchange

 

Name of the programme: Promotion of listing of securities on the stock exchange

Start date:  2021-07-21                                                           End date: NA

Objectives: To promote the development of capital markets in Lithuania and thus help micro, small or medium-sized enterprises to attract the necessary financing for development, to compensate them for part of the costs of issuing shares and/or bonds in order to include these securities in the securities market regulated by the regulated market operator AB Nasdaq Vilnius and the alternative securities market First North (Stock Exchange).

Source of funding: EUR 1 million of the funds repaid and/or to be repaid to the INVEGA fund.

Delivery agents and type: National development institution INVEGA.

Main targeted beneficiaries (eligibility criteria): The compensations are available to micro, small or medium-sized enterprises.

Financing terms: SMEs may apply whose shares and/or bonds are not listed on a stock exchange before the date of entry into force of the schedule to the measure, 21 July 2021. If the applicant’s shares are listed on the stock exchange before the date of entry into force of the schedule, the applicant is entitled to apply to INVEGA for a subsidy for the listing of the bonds on the stock exchange. If the applicant’s bonds are listed on the stock exchange before the date of entry into force of the Schedule, the applicant shall be entitled to apply to INVEGA for a subsidy for the listing of the shares on the stock exchange. INVEGA will reimburse 50% of the eligible costs incurred. The maximum amount INVEGA can reimburse per applicant is: EUR 100 thousand when the shares issued by the applicant are duly listed on the securities exchange; EUR 50 thousand when the bonds issued by the applicant are duly listed on the securities exchange.

Programme terms: The requesting applicant, seeking to receive the subsidy, must have issued shares and/or obligations on the Stock Exchange, except for cases where the applicant applies, whose shares and/or obligations have already been listed on the securities exchange before INVEGA's decision to recognize the applicant as eligible for assistance the stock exchange.

Actual cost: - until 2023-05-31 6 SMEs were supported, the total amount of subsidies paid out is EUR 100 thousand.

Relevant link to the programme website (if available): https://www.invega.lt/en/business/business-start/global-grants/169/promotion-of-listing-of-securities-on-the-stock-exchange-104.

Similar local or regional programmes (if independent): no

Figure 26.1. Trends in SME and entrepreneurship finance in Lithuania

Source: See Table 26.4

Statlink

Table 26.4. Sources and definitions of Lithuania’s Scoreboard

Indicator	Definition	Source
Debt
Outstanding business loans, SMEs	Total outstanding loans to domestic NFCs (SME)	Bank of Lithuania
Outstanding business loans, total	Total outstanding loans to domestic NFCs	Bank of Lithuania
New business lending, total	New business of euro-denominated loans granted by Lithuanian MFIs (banks, foreign bank branches and credit unions) to euro area non-financial corporations. New business covers financial contracts that specify for the first time loan, and renegotiations of existing loan contracts. New business does not cover revolving loans and overdrafts, as well as credit card debt.	Bank of Lithuania
New business lending, SMEs	New business of euro-denominated loans granted by Lithuanian MFIs (banks, foreign bank branches and credit unions) to euro area non-financial corporations. New business covers financial contracts that specify for the first time loan, and renegotiations of existing loan contracts. New business does not cover revolving loans and overdrafts, as well as credit card debt. (SMEs).	Bank of Lithuania
Government guaranteed loans, SMEs	Loans guaranteed by government, stocks at the end of the year
Non-performing loans, total (NFCs)	90 days past-due (material exposure) or unlikely to be repaid in full without collateral realisation (irrespective of any past-due amount or of the number of days past-due), or impaired or defaulted according to applicable accounting or regulatory frameworks.	Bank of Lithuania
Non-performing loans, SMEs	90 days past-due (material exposure) or unlikely to be repaid in full without collateral realisation (irrespective of any past-due amount or of the number of days past-due), or impaired or defaulted according to applicable accounting or regulatory frameworks (SMEs).	Bank of Lithuania
Interest rate, SMEs	Interest rates on new business of euro-denominated loans granted by Lithuanian MFIs (banks, foreign bank branches and credit unions) to euro area non-financial corporations (flows). New business covers financial contracts that specify for the first time the interest rate on a loan, and renegotiations of existing loan contracts. New business does not cover revolving loans and overdrafts, as well as credit card debt. Loans smaller than EUR 1 million are used as proxy for SMEs’ loans.	Bank of Lithuania
Interest rate, large firms	Interest rates on new business of euro-denominated loans granted by Lithuanian MFIs (banks, foreign bank branches and credit unions) to euro area non-financial corporations (flows). New business covers financial contracts that specify for the first time the interest rate on a loan, and renegotiations of existing loan contracts. New business does not cover revolving loans and overdrafts, as well as credit card debt. Loans larger than EUR 1 million are used as proxy for large firms’ loans.	Bank of Lithuania
Collateral, SMEs	Results from the survey of non-financial enterprises are used as proxy for this indicator.	Review of the Survey of Enterprises, Bank of Lithuania
Percentage of SME loan applications	SME loan applications/ total number of SMEs. Results from the survey of non-financial enterprises are used as proxy for this indicator.	Review of the Survey of Enterprises, Bank of Lithuania
Rejection rate	Number of rejected applications / Total number of applications	Review of the Survey of Enterprises, Bank of Lithuania
Non-bank finance
Venture and growth capital	Seed, start-up, early stage and expansion capital	Startup Lithuania Dealroom database
Leasing and hire purchases	Financial leasing is a loan for the purchase of equipment meant for long-term use and similar fixed assets, if the lessor leases such fixed assets to the lessee for a fee that covers payments of the loan principal and interest. At the end of the lease period the right of ownership transfer to the lessee. Data covers resident non-financial corporations leasing.	Association of Lithuanian Banks
Factoring and invoice discounting	Factoring is a loan for financing the working capital of an enterprise or financial institution, whereby the factoring company acquires accounts receivable (claims) of such enterprise or financial institution by taking over the enterprise's or financial institution's right of claim on receivers of goods or services and assuming credit risk. Data covers total portfolio of factoring and invoicing.	Association of Lithuanian Banks
Other indicators
Payment delays, B2B	Average time for actual payment - average payment terms allowed to customers	Intrum Justitia – European Payment Report
Bankruptcies, SMEs	Number of bankruptcy processes instituted in the corresponding year.	AVNT LT

References

Bank of Lithuania – https://www.lb.lt/en/

AVNT LT https://www.avnt.lt/en/Home/

State Data Agency of Lithuania – https://www.stat.gov.lt

Startup Lithuania Dealroom database – https://www.startuplithuania.com/dealroom-database/

Review of the Survey of Enterprises – https://www.lb.lt/en/publications/review-of-the-survey-of-enterprises-2018-1

Notes

← 1.  Although estimations indicate that the number of NFCs experiencing financial difficulties may have increased, NFCs with loans from financial institutions are less vulnerable. This is because banks increasingly lend to firms with sufficient funds to withstand shocks, partly explaining the decline in NPLs. Moreover, given the wide and large amounts of government aid measures in 2020-21, it is likely that firms have accumulated a sufficient financial buffer to withstand the shocks.

← 2.  State Data Agency of Lithuania: Gross value added of small and medium enterprises at current prices (share in the national GVA)

← 3.  SMEs indicate that borrowing from other NFCs is more convenient, as there is less bureaucracy compared to borrowing from financial institutions. As many SMEs lack knowledge on how to navigate complex bank processes, they prefer borrowing from other NFCs, which they find easier. Banks also have tighter lending standards, i.e. are willing to lend to less risky NFCs that have high quality financial reporting.

← 4.  For more information, see the Bank of Lithuania Reviews on the Bank Lending Survey:

https://www.lb.lt/en/reviews-and-publications/category.40/series.196?category=&series=&ff=1