SME Finance, a Lithuanian-based fintech startup and leading fintech platform for non-banking financing in the Baltic states, today announced it has received €80 million in back from the European Investment Bank (EIB) to support small and medium-sized Lithuanian, Latvian, and Estonian enterprises in the transport, retail, wholesale, production, and services sectors. The investment is the largest EIB investment awarded to a fintech lender.
The first wave of funding from the EIB is expected to reach businesses by the first half of 2021. SME Finance plans to offer business financing with 4 to 8 percent annual interest rates. The maximum factoring limit granted to individual enterprises will be capped at EUR 5 million.
SME Finance was founded in 2016 to address an identified funding gap in the financing of working capital for SMEs and midcaps. Since its establishment, the company has financed invoices worth more than 459 MEUR, has provided financing services to 500 clients, and has raised more than 114 MEUR from local and international investors. SME Finance now has 80 MEUR of available capital and provides short and long-term loans, factoring, and leasing. The startup has partnerships with world-leading providers of trade-related insurance solutions, including Euler Hermes and Coface. SME Finance is headquartered in Vilnius, Lithuania.
“Given the current working capital constraints facing small and medium-sized enterprises and the substantially reduced availability of bank loans in the region, this is a timely and much-needed partnership of next-generation financial technology with public financing that will enable SMEs and midcaps across the Baltics to more quickly access financing to overcome their cash flow shortages.” says the CEO of SME Finance, Mindaugas Mikalajūnas.
Since the coronavirus began in January 2020, Lithuania, Latvia, and Estonia have seen the largest decline in bank loans awarded to SMEs across the EU region.
The first wave of funding from the EIB is expected to reach businesses by the first half of 2021. SME Finance plans to offer business financing with 4 to 8 percent annual interest rates. The maximum factoring limit granted to individual enterprises will be capped at EUR 5 million.
Of the EUR 80 million received, 70 percent (EUR 56 million) will be granted to factoring services for SMEs and 30 percent (EUR 24 million) to factoring services for midcaps. Approximately 60 percent of the funds will be allocated to Lithuanian businesses, while the share awarded to Latvian and Estonian enterprises, in a common portfolio of factoring services, will amount to 20 percent each
