There is a popular proverb in Estonian that says “debt belongs to a stranger”.
On the one hand, this piece of wisdom from our ancestors reminds us that loans taken have to be repaid, which is undoubtedly true. On the other hand, the well-known proverb has acquired a more negative meaning as well, implying that debt is something scary that should be avoided at any cost.
However, modern Estonians live in a completely different world than their ancestors. In our world, the value of money tends to decrease, especially under inflationary conditions. Therefore, debt owed to a “stranger” is the most reasonable way to develop your company and grow your business. “Owning” things – including money – may have seemed wise in the 19th century, but the world has changed beyond recognition since then.
Finora offers various loans for companies. Our portfolio includes products for companies with very different needs, and Finora is especially valued as a partner of small and medium-sized companies.
Which business loans can you choose from?
There are many different ways to finance companies, and loans for companies are divided according to their purpose, collateral, and length of the loan period.
Microloan and overdraft
If you are an entrepreneur who only needs a short-term loan, i.e. less than a year, the microloan and overdraft are suitable for you, as these are designed for short-term financing of working capital. Loan amounts depend on the company’s average monthly turnover, and the length of the loan agreement is up to 12 months.
Finora’s microloan and overdraft loan amounts are between 5,000 and 50,000 euros and are suitable for companies with an annual turnover of up to 2 million euros, whose board members are ready to personally guarantee the loan agreement. The loan amount depends on the company’s turnover and the interest rate is fixed for the entire loan period. That way you don’t have to worry about the rising EURIBOR, i.e. the Euro Interbank Offered Rate.
Finora’s loan terms are known for their flexibility. If necessary, the term of a microloan can also exceed 12 months. For example, if your company needs to purchase a small device that cannot be financed with a lease. Or if you would like a loan to open a new line of business, and repayments spread over a longer period of time are more suitable for you to better manage your company’s planned cash flows.
A creative loan is a unique loan product with a term of 12 to 36 months. Finora is the only institution the Baltics to offer this type of company loan.
The creative loan is intended for small and medium-sized companies operating in the cultural and creative fields, such as
- the audiovisual sector (films, TV shows and multimedia)
- arts and crafts
- cultural heritage
- performing arts
- visual arts
Creative loans can be taken for one to five years, with the maximum loan amount of 250,000 euros and the interest rate up to 16% per year. While loan amounts above €20,000 must generally be secured by real estate, this is not necessary for creative loans.
What are the benefits of creative loan?
- Flexible repayment schedule
- Surety from a management board member is sufficient as collateral
- The loan principal can be repaid when the project is completed. Only the interest has to be paid on an ongoing basis
- The loan can be repaid early free of charge
- The loan has many uses: starting or expanding a project, acquiring fixed assets and financing current assets
- Perfect for projects for which grants are paid out only after the project is completed
Company loans with a term of more than 12 months
For the implementation of longer-term plans it is reasonable to apply for loans with terms longer than 12 months. Generally, these loans are secured by real estate and are called mortgage loans or investment loans, depending on the purpose of the loan.
A mortgage loan is secured by a mortgage on real estate (i.e. an apartment, house, or plot of land) and allows us to offer a lower interest rate to the borrower.
Finora’s mortgage loan has a wide range of uses:
- acquisition of real estate
- refinancing of existing liabilities
- starting a business
- acquisition of equipment
An investment loan is a company loan with a versatile use, for example
- acquisition or renovation of fixed assets
- expansion of the company’s activities
- carrying out a development project
In the case of an investment loan, the loan amount is always secured by real estate. The advantage of an investment loan is its longer repayment schedule. Also, the loan can be used for larger projects and investments with a longer repayment period.
We recommend that those considering taking an investment loan remember that mortgage loans and microloans have one important advantage over investment loans: the “free” use of the loan amount. This means that in the case of microloans and mortgage loans, even when we would like to know the purpose of the loan, the client doesn’t have to provide a detailed overview of price offers and budget as in the case of an investment loan.
What are the advantages of company loans offered by Finora?
More and more small and medium-sized local companies are choosing Finora as their partner. There are several reasons for this, but the main one is the flexibility we can afford when working with our customers. In big banks, entrepreneurs are often treated as a problem. We see you as an opportunity to create value together.
The advantage of Finora company loans is their flexible repayment: for example, the loan principal can be repaid after receiving the revenue or support, and only interest has to be paid on an ongoing basis. This is suitable for projects that require bridging financing.
Secondly, Finora is known for their fast processing of loan decisions and prompt conclusion of contracts. If necessary, we advise you on your loan project and help find the best solution for you. The client doesn’t necessarily need to know the name of each loan product. It is sufficient if they just explain their wish to us. We can find the best solution together.
What are the requirements for the loan applicant?
Unlike big banks, Finora sees a person behind every loan applicant. For us, you are an equal partner, not some annoying obligation on the loan manager’s calendar.
Of course, we do have certain prerequisites that make a successful loan application possible:
- The company is a private limited company or a limited liability company registered and operating in Estonia.
- No liquidation or bankruptcy proceedings have been initiated against the company.
- In the case of a mortgage or investment loan, the collateral offered should be liquid.
- The company should not have active payment defaults.
However, each case is different, so don’t be ashamed to talk about your situation, even if it doesn’t seem fully unproblematic to you.
How to apply for a business loan from Finora?
Finora is known for its promptness and flexibility, and we will not compromise on our reputation. Our response regarding our loan decision usually takes one to two working days. After the notarial transaction we can issue the loan within one to three working days, normally the same day as the notary appointment.
Documents required for application
To apply for a loan for your company from Finora, you should first contact us and fill out a loan application on our website or in the self-service portal. We will then ask you for some documents:
- Financial statements of the company (balance sheet and profit statement for the last completed financial year; balance sheet and profit statement for the last full quarter of the current financial year);
- Statements of the company’s bank account(s) from the six months preceding the submission of the application;
- In case the collateral of the loan is the surety of the owner of the company or a member of the board, also the bank account statement of the guarantor for the last six months is also required.
“Why so many reports and an account statement on top of everything?” is a question company managers occasionally ask us when applying for their first company loan from Finora.
From the annual report we can see how your company was doing in the previous financial year. The balance sheet and profit and loss account reports for the current year help us understand your company’s results in the current financial year.
It is important for us to understand our customer’s business activities. This is why we wish to see the account statements from the last six months from the banks where the company has operations. If the company applies for a mortgage loan, we certainly also expect information about the collateral: an appraisal report (not older than six months) or, in the case of liquid assets, the description, address, and images of the collateral.
Please contact us and we will take a look at your needs together, evaluating all the aspects involved in taking a loan. After that you will be able decide which loan product meant for companies is best suited for you.
We are happy to meet you!