Attraction of risk and debt capital |
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Where to find all information
on various financing possibilities from Swedbank?
- Call the most convenient Swedbank’s branch and arrange a meeting
with the Corporate Customer Manager or Branch Manager
- Visit your the closest Swedbank’s branch, and our employees will
give you consultations and help to arrange a meeting with the Corporate
Customer Manager
- Call Telephone Bank Info line for companies 67444444
- Write to the e-mail address info@swedbank.lv, and you will receive
the answers within a day
- Look up Corporate Lending possibilities in Swedbank’s website;
we also recommend checking the answers
to most frequently asked questions
1. Types of loans
What are the loan types offered by the bank?
Short-term loans (for example, Overdrafts, Credit Lines, Loans for funding
of working capital), and long-term Investment Loans.
What is leasing?
Leasing is lease with the right to buy out the underlying item. Usually
lease is used to acquire cars, equipment, and buildings.
In case of a lease the customer acquires the right to use the subject
of leasing and pays for its lease, while the owner of the subject is the
leasing company until the end of buy-out.
What is factoring?
Factoring is financing of current assets against accounts receivable (for
buyers who are legal entities).The service is not appropriate for covering
of debts of private individuals.
Factoring is useful for, e.g., manufacturers, wholesale
companies, suppliers, export companies, rapidly developing small and medium-sized
enterprises facing cash flow problems due to delayed or deferred payments.
Factoring stabilizes the cash flows, reduces costs related to administration
and collection of buyers’ debts, and reduces risks associated with attracting
of new buyers and conquering of markets
2. Loan amounts and maturities
How big amounts can the bank issue in loans?
Loan amounts can vary depending on the type of the loan. E.g., in case
of an overdraft the minimum amount is Ls 500.
The bank evaluates the maximum amount on a case-to-case
basis; however, it depends on the purpose of the loan, collateral offered,
and other factors.
For what period of time (maturity) can the
loan be issued?
The bank issues loans to companies with a maturity from 1 month (short-term
loans) to 10 years (Investment loans).
Are there restrictions on the repayment and
may the repayment be effected by instalments?
The respective contracts provide for the customer’s right to fully or
partially repay the loan before maturity, in exchange of paying a penalty
interest on the prematurely repaid amount. The funds repaid before maturity
may no longer be utilised by the customer.
3. Interest rates
What is fixed and what is floating rate?
The fixed rate is determined for a period up to 5 years and remains unchanged
during the period. If a loan is issued for 10 years, after five years
the rate is reviewed so that the bank can plan loan payments more accurately.
A floating rate consists of the term indicated and
interbank currency borrowing rate (RIGIBOR, LIBOR, EURIBOR), plus certain
fixed component – additional rate charged by the bank. Interbank rates
fluctuate depending on changes in foreign exchange market rates, therefore
they may both increase and decrease.
Interbank rates may be checked on the Bank
of Latvia website, and the newspaper “Dienas Bizness”.
Which interest rate to choose – fixed or
floating?
A fixed or floating rate is determined depending on the customer’s wishes.
The fixed rate is usually slightly higher than the floating rate at the
time, but it is not possible to forecast floating rate changes over a
longer period of time.
Customers are usually recommended to choose the fixed rate if the loan
is issued for a longer period of time (5-10 years), as then the customer
is not affected by interest rate fluctuations each year and will be able
to take into consideration particular expenses over a longer period of
time.
How often and for what the interest must
be paid?
The interest is payable on a monthly basis. The interest is calculated
only on the amount of loan received and unpaid.
What could be the approximate rate limits,
average rates?
The interest rate is determined for each loan individually depending on
the financial situation of the company and value of the collateral offered.
The Bank’s specialists will provide you more detailed
information regarding the possible interest rate after receipt of documents
for issuing of the loan at the Bank.
4. Consideration of loan requests
How long does it take to examine a loan application?
Loan requests are examined depending on the type of the loan and complexity
of the project – from a couple of days to several weeks.
How long until you can receive the loan?
The time needed for issuing the loan depends on the type of the loan:
from a couple of days (overdraft in case of no collateral) to approximately
one month (in case of loans where collateral is needed), as you will first
collect and submit to the Bank all the required documents, the Bank will
examine the loan application and make the decision, prepare loan documentation,
register the collateral (with the Land Book Register or Commercial Pledge
Register of the ER).
How much is charged for examining the loan
application?
Swedbank examines loan applications free of charge.
5. Documents required for issuance of the loan
What documents need be submitted to receive
a loan?
The following documents are required for issuing of a loan:
- Loan Application (J)
- Legal and financial documents of the company, business plan and documents
of the potential collateral, see Annex to Loan Application (J)
Some of the above documents are not mandatory, if:
- The borrower has no such document due to objective reasons;
- Their content is not relevant to the assessment of credit worthiness;
- The customer has previously received a loan from the bank and all the
information on the customer is available in the bank’s customer database.
All the submitted documents must be signed by the customer’s signatories.
What is the period on which there has to
be the Balance Sheet and other financial documents submitted?
Balance Sheet and Profit and Loss Account for the previous year of the
company’s operations and financial data of the current year must be submitted.
Does the Balance Sheet need to be approved?
The Balance Sheet for the previous year of operations must contain a State
Revenue Service’s note on submission. Operational balance sheet does not
need an SRS approval.
Does the Balance Sheet need to be audited?
The Balance Sheet for the previous year of operations must be audited,
if required so by Latvian legislation. If the audit statement is not necessary,
the annual report must be approved by an internal auditor.
How detailed should a business plan be, on
how many pages?
There are no set standards as to the contents of a business plan, however,
the Bank issues a list of questions to help provide the needed information
in the business plan.
What is cash flow?
Cash flow is planning of the company’s budget (planned revenues and expenses
over a specified future period), using the Bank loan.
Cash flow is a comprehensive income and expense statement
prepared for a period from one month to several years depending on the
situation of each specific company.
Is it obligatory to prepare a cash flow statement?
Preparation of cash flow statement is compulsory, since it demonstrates
the company’s short or long term solvency, while based on the annual accounts
submitted by the company the Bank can only state its present situation.
By reviewing the cash flow, the Bank assesses the company’s future plans
and real growth potential. For more information go to a branch or call
67444444.
6. Collateral
What is a collateral?
Collateral is a pledge against the lent money, remaining in the company’s
possession for the term of the loan.
What may serve as a collateral (pledge)?
Possible types pf collateral:
- Real estate
- Fixed assets
- Goods, materials, raw materials and goods in production, receivables,
other current assets
- Securities, depending on their liquidity
- Deposit with Swedbank
- Guarantees, warranties
What is documentation on the collateral (pledge)
that need be submitted?
Documents to be submitted on the collateral
Must the collateral (real estate) be evaluated?
Yes, the pledge must be evaluated according to the real estate evaluators list approved by "Swedbank" AS.
Must the collateral (pledge) be insured?
Yes, the pledge must be insured according to the Bank's requirements. The costs of insurance are covered by the customer.
Information on the real estate valuators and insurance companies is available
at all branches or by calling 67444444.
Is it possible to take credit without collateral?
Yes, we offer to companies Ovedraft without collateral (turnover of client’s account will be served as collateral) or Eurocard/MasterCard.
7. Most
significant costs of processing of a loan from Swedbank
What are the most significant costs?
Loan applications and customer’s documents are examined by Swedbank
free of charge
Most significant costs:
- Management Fee – fee
for issuing of the loan
- Document processing fee
– legal compensation for processing loan documentation
- Additional costs are incurred if the collateral is real estate or
commercial pledge:
- real estate property evaluation costs,
- insurance of the pledge,
- services of a notary public,
- fee for registration of mortgage/pledge.
What is the difference between management
fee and document processing fee?
Management fee is a fee for issuance of the loan, while the document processing
fee is the legal compensation for processing the loan documents.
Are there any charges for the maintenance
of the loan account?
No.
8. Are there
any special programmes for lending to small and medium-sized companies?
Yes:
In February 2004 Swedbank, Nordic Investment Bank (NIB) and Council
of Europe Development Bank (CEB) signed an agreement on participating
in a lending programme aimed at promoting and supporting women in entrepreneurship.
Loans are granted to companies owned by women or where women are engaged
in company management, strategic decision-making, or issued to support
projects resulting in mew workplaces for women.
9. Cooperation
with other banks
Is it possible to receive a loan from Swedbank
if the company already has a loan from another bank?
Yes, it is possible. The Bank will review all loan requests.
Can a company that has received a loan from
Swedbank keep an account with other bank?
Yes. However, if you are using a loan facility, it is better to ensure
cash flow through one bank, as regular incoming amounts to the account
reduce the interest payable to the Bank on the funds drawn down.
Do you need to be the Bank’s customer to
receive a loan?
No, not necessarily.
Is it possible to assign a loan in another
bank to Swedbank?
Yes, it is possible.
10. Other questions
Does the bank issue loans to farming companies?
Yes, but the customer’s solvency and business risks are strictly assessed.
Can a newly established company receive a
loan?
If the company is not established yet, the founders can receive a loan
for starting business as private entities, using, for example, Options
Loan from Swedbank.
The Bank does not finance investments in the company’s
share capital, as such investments must naturally come from the founders’
resources. Swedbank issues loans to newly established companies only
if they have a strong collateral, e.g., mortgage on real estate. The Bank
does not lend to companies based on the business plan alone.
What are the most common difficulties in
lending encountered by the newly established companies?
Usually, the key problem when applying for loans is to find the required
collateral. When starting a new business, sometimes there are also difficulties
with convincing the bank on profitability of the business and on loan
repayment, as there is no sufficient information and confidence regarding
the planned cash flow.
The experience and business understanding of the company’s manager are
also an important precondition for financing a new company.
Will the Bank visit the customer’s company if the customer wishes to take
a loan?
Definitely, because the visit will allow the bank’s officer to arrive
at a more professional opinion on the customer’s business and collateral
offered.
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