Lithuania-based fintech SME Finance receives €80M from EIB to support Baltic SMEs

The development of SMEs plays a pivotal role in determining the growth and competitiveness of any market, across the globe. 

According to the European Commission, SMEs are the backbone of Europe, accounting for 99% of all companies in the EU and two-thirds of private-sector employment. Right now, most of Europe’s SMEs rely heavily on bank loans with limited access to other kinds of finances. 

In this regard, SME Finance, a fintech company was established in 2016 to address the funding gap in the financing of working capital for SMEs and midcaps. 

Received €80M from EIB

Recently, the Baltic fintech startup SME Finance received €80M 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. According to the company, it is the largest EIB investment awarded to a fintech lender.

“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.

It’s worth mentioning here that, countries like Lithuania, Latvia, and Estonia have seen the largest decline in bank loans awarded to SMEs across the EU region during the period of the pandemic.

The company will use the funding to meet the working capital financing needs of enterprises through its self-service factoring platform. 

4% to 8% annual interest rates

According to the company, the first tranche of funding from EIB is expected to reach businesses by the first half of 2021. The Lithuanian company plans to offer business financing with 4% to 8% annual interest rates.

SME Finance says that the maximum factoring limit granted to individual enterprises will be capped at €5M. Of the €80M received, 70% (€56M) will be granted to factoring services for SMEs and 30% (€24M) to factoring services for midcaps. 

Approximately 60% 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% each.

Provided financing services to 500 clients

Headquartered in Vilnius, Lithuania, SME Finance has financed invoices worth more than €459M, provided financing services to 500 clients, and raised more than €114M from local and international investors. 

SME Finance now has €80M of available capital and provides short and long-term loans, factoring, and leasing. The company has partnerships with world-leading providers of trade-related insurance solutions, including Euler Hermes and Coface.

Main image: SME Finance