Microenterprises in Estonia, Latvia and Lithuania will be able to apply for up to €15 million in new loans under a three-year initiative backed by a European Investment Fund (EIF) guarantee.
Latvia-based alternative lender Capitalia will use the EIF guarantee to offer crowdfunded loans to the smallest businesses across the three Baltic states, the EIF announced on Monday.
Microenterprises are defined as companies with fewer than 10 employees and annual turnover or total assets below €2 million.
Capitalia plans to offer loans of up to €50,000, with repayment terms of up to 36 months, reduced interest rates and no hard collateral requirements.
The programme is projected to support almost 700 loans, with an average loan size of about €30,000, it added.
“Loans backed by the EIF guarantee help us provide more accessible financing to Baltic companies,” Capitalia general manager Juris Grišins said.
InvestEU protection for crowdfunding loans
The EIF guarantee is being provided through the European Union’s InvestEU programme, which uses an EU budget guarantee to support financing, the EIF said.
The deal is the first time in Europe that loans issued via a crowdfunding platform benefit from InvestEU protection.
“We are strengthening access to affordable finance for microentrepreneurs who face barriers in securing credit,” EIF chief executive Marjut Falkstedt said.
This is the second guarantee-based cooperation between Capitalia and the EIF, following a previous agreement under the Employment and Social Innovation (EaSI) microfinance-guarantee programme.
Under EaSI, Capitalia issued 523 loans worth more than €9.8 million to small businesses in Estonia, Latvia and Lithuania.
