This week more than 70k. small and medium-sized enterprises (SMEs) will receive their credit reports. The purpose of the initiative is to provide executives with information on companies that are available to market participants and on which not only reputation but also business finance opportunities and terms depend.
Comprehensiveness and availability of business information
“Business investment, expansion, and job creation often require external financing and are inherent in the company’s creditworthiness,” says Andrius, CEO of Porti, a credit bureau. “The World Bank, which has conducted research in many countries, has repeatedly stated that the comprehensiveness and availability of business information also increase the availability of credit. For a business, this means two essential things – greater access to finance and more favorable conditions.
Trust is important not only with banks but also with business partners. With this initiative, we encourage you to look at your business from the outside, to pay attention to the information available to market participants. We also aim to create conditions for improving the “profile” of creditworthiness.
Credit reports are evaluated for business borrowing from credit institutions
Applying for asset leasing, state-guaranteed loans, credit fuel cards, applying for EU support, concluding transactions with suppliers and other business partners.
According to Vaidas, Director of the Financial Services Department at Man Bank, a company’s credit risk is a set of criteria, including credit history. “Of course, credit history is not a determining factor in the financing process, but one of the important elements. Before providing financing, the bank must make sure that the company has no significant overdue debt, for example, to employees, suppliers or the state, and to assess the impact that current payment delays may have on business continuity. Perhaps this will not prevent you from obtaining the necessary financing, but the bank may apply additional financing conditions, ask for more different documents, and in some cases, the interest on the loan may increase, ”says Simon.
According to estimates by Man Bank, if a high-risk company with a certain amount of overdue credit history would borrow $ 300,000. investment project and is planning to repay the loan within 7 years, financing for it may become more expensive up to 30 thousand. euros. This would result in higher than average loan interest rates and other additional financing terms.
“However, while serving over 40,000 small and medium-sized enterprises in Lithuania, we see that the business is taking care of its financial health the farther and farther. Today, there are a variety of tools available, so the most important thing is to keep track of your credit history, not to put it in your hands, and to deal with it right away when you have trouble. It is important to remember that good credit history is important not only in cooperation with the bank but also in working with partners and clients, as it demonstrates the reliability of the company and its good reputation ”, – states Simon.
Transparency and access to information
Statistics show that one in six companies in Lithuania has links with bankrupt companies, thousands of companies do not declare their current activities or submit, or are late in reporting to the Center of Registers. This has an impact on today’s poor business reputation and mistrust.
“In business, we often hear that transparency and access to information give us more confidence and create a growth-friendly environment. The lack of trust in Lithuanian business and society today still deprives them of much revenue and hampers progress. The less trust you have, the slower decisions are made, business deals are made, more resources are spent on control of resources, research and more. We pay “lack of confidence” taxes that could become investments in growth, “says Andika, developer of the Business Transparency Initiative.
Porti has established and operates a credit bureau. It is a responsible lending system where the creditworthiness of customers is evaluated by banks, credit unions, consumer credit, leasing, telecommunications, and other companies. The credit bureau plays an important role in the financial system by helping financial institutions make sound credit decisions.
Man is a leading Nordic financial services group. As a bank with long-term customer relationships, Man provides advice and financial services to clients in Sweden and the Baltic countries. Man’s group banks in Denmark, Finland, Norway, and Germany have core business in corporate and investment banking for corporate clients and institutions. Man Group employs around 17,000 people. workers.
The Black Wave is a transparent business labeling initiative aimed at promoting transparent and responsible business practices in Lithuania. Launched in 2007 Currently, it unites more than 50 organizations that publicly advocate a transparent pay policy, transparent participation in tenders (public procurement) and responsible payment of all taxes provided by the laws of the Republic of Lithuania.