Economic growth in Latvia is impossible without capital, yet lending remains one of the most painful topics for new and growing enterprises. This was candidly shared by the chairwoman of the Latvian Chamber of Commerce and Industry (LCCI) Katrina Zarina in the podcast of the portal tv3.lv "Piķis un ģēvelis!", explaining what the real situation is from the entrepreneurs' side and what still needs to change.
Official data indicates that lending volumes in Latvia are increasing — both for households and for enterprises. However, as Zarina emphasized, this does not yet mean that banks have suddenly become open to new ideas, writes tv3.lv.
"The question is whether banks are really lending more or if entrepreneurs are simply implementing projects that were postponed during times of crisis?" she pointed out.
In her opinion, some entrepreneurs during the Covid-19 pandemic and in the context of high interest rates postponed investments in anticipation of a more stable period. Now, as rates are no longer rising so rapidly, projects are gradually returning to the agenda.
Despite signs of recovery, entrepreneurs' sentiment remains cautious. One of the main obstacles continues to be high interest rates and the banks' requirement for personal collateral.
"In many cases, this means that the entrepreneur has to pledge not only the business but also personal property," Zarina explained.
The podcast clarifies that although this is not always the case, banks often require personal guarantees even in the case of limited liability companies. This makes many entrepreneurs think twice.
"If you already have a stable, moderately successful business, the question arises — why risk personal security?" noted the head of the Latvian Chamber of Commerce and Industry.
Another important issue pointed out by Zarina is insufficient financial literacy. Not all entrepreneurs fully understand how to combine various sources of financing.
"Not everyone is clear about what other financing tools exist besides bank loans," she admitted.
It is here, in Zarina's opinion, that there is room for collaboration between entrepreneurs, banks, and business organizations — to educate, explain, and help navigate available financial opportunities.
The conversation also included criticism that discussions too often remain at the level of talk.
"Just talking is not enough. Someone needs to go and do it," emphasized Zarina.
According to her, the current situation is such that both sides — entrepreneurs and banks — are interested in lending: "Banks need to increase their loan portfolio, entrepreneurs need to grow. This means that the likelihood increases that both sides will finally start to act, rather than just talk.
