After a prolonged period of caution, in 2025, the business lending market in Latvia is demonstrating a confident recovery, driven by lower interest rates and a growing willingness among entrepreneurs to invest in development.
Data contained in the "2025 Financing Accessibility Report" by the Bank of Latvia indicates a significant turning point in lending. According to the latest financial report, in the first eight months of 2025, the outstanding loans issued to non-financial enterprises increased by 18.6%, significantly exceeding GDP growth rates. This growth is attributed to several factors.
Undoubtedly, a major role is played by changes in monetary policy in the eurozone — the decrease in EURIBOR rates has created more favorable conditions for borrowing.
These favorable conditions have contributed to a faster growth in borrowing, and the Financial Sector Association noted that the growth of business lending in Latvia was among the fastest in the eurozone. Although most business financing is provided by commercial banks, lenders like Cityfinances are becoming increasingly important partners, especially in servicing small and medium-sized enterprises that require quick, flexible, and small loans.
"The year 2025 will mark a transition from caution to growth. However, many small businesses still have limited access to bank financing due to complicated procedures or insufficient collateral. Additionally, in a dynamic business environment, companies need money immediately, without wasting time on bureaucratic formalities or trips to the bank. Since Cityfinances credits the company's account on the same day the application is submitted if the assessment is positive, entrepreneurs are eager to take advantage of this opportunity to obtain funds," comments the company's director, Ivars Vitols.
With moderate inflation and stable labor market indicators, the growth of lending will continue into 2026.
"We expect that companies will increasingly seek targeted financing that supports modernization, digitalization, and sustainable projects," adds I. Vitols.
