Banks in Romania are looking to expand their financing facilities for small and medium-sized companies in Romania, while some of the lenders have boosted their presence in the local start-up ecosystem.
BR has talked to some of the largest banks in Romania to find out what’s their strategy on financing entrepreneurial companies. Here are some the costs that entrepreneurs should take into account if they want to tap the banking system for financing.
BCR, the largest bank in Romania by assets, has several financing options such as investment loans, bank guarantees loans, loans for working capital and pre-financing loans for APIA subsidies (in the agriculture field).
The loan for financing the working capital has an interest rate between 5 percent and 6.5 percent + ROBOR 3/6 months, depending on the duration of the loan
The investment loan is based on an interest rate between 3.5 percent to 6 percent + ROBOR 6 months, depending on the results of the company.
Pre-financing for APIA is based on an interest rate of 2 percent + ROBOR 3 months.
BCR said that some of facilities for a current account are free in the case of Start-Up. This includes no costs for the monthly administration of the account, free internet banking and no costs for the administration of the debit card. The bank added that if offers a discount of 23 percent for the electronic signature package.
Meanwhile, CEC Bank, the state-owned lender, says it has a wide array of financing facilities for start-ups.
The bank provides investment loans under the government program Start-Up Nation – loans for the current operations and bridge loans.
In the case of investment loans, the duration of the financing starts with six months and can reach 10 years. The lending period can extend to 15 years provided that the duration of the investment is equal or bigger than the lending period.
The grace period for loans is up to 3 months for short terms loans and up to 6 months for medium term. For the long term financing, the grace period can climb up to 12 months.
The value of the loan can reach 85 percent of the investment value, while the contribution of the borrower can be cash or in kind. The loan can be taken out in the local currency/foreign currency and can include any kind of guarantees or a mix of guarantees accepted by the bank.
The repayment schedule can be established with the bank and the interest rate is paid monthly.
“These conditions can be negotiated depending on the creditworthiness of the customer, the turnover and the economic-financing indicators of the firm,” CEC Bank told BR.
Another kind of loan can be used for covering the working capital financing needs and for the refinancing of other credit lines from other financing institutions.
It targets any company that has a good payment behavior in relation to the state, the business partners and credit institutions. The amount of the loan will be correlated with the working capital requirements of the firm, with its financial cycle and the its repayment capacity.
It can be granted in the Romanian currency, the US dollar or the Euro and has a maturity of 24 months with a repayment extension option.
Any guarantees or a mix of guarantees are accepted by the bank. The reimbursement period can be permanent, during the validity period of the credit line.
The bridge loan under the Start-Up Nation initiative has a maximum duration of 24 months and can amount to RON 200,000. It can be granted in the local currency.
The interest rate for loans granted in the 2018-2020 is fixed at 3.99 percent per year. The analysis commission for this loan is 0, while the management commission is 0.75 percent of the loan value, payable on maturity. The commission for granting the loans stands at 0.75 percent of its value, payable on maturity. There is no commission for early repayment of the whole loan.
The guarantee issued by the National Credit Guarantee Fund for SMEs will cover up to 80 percent of the loan, while the rest can be covered by real guarantees (including goods financed within the project with certain exceptions). Insurance policies for the goods acquired through Start-Up Nation can also act as guarantees as well as the mortage on the current acocunts of the company opened at the bank in any currency.
CEC Bank also offers the Start-Up IMM package that includes products and services for the management of the company.
ING Bank Romania has several financing options for companies with at least one year of operations.
Business Credit Card for companies with at least 12 months of activity and a turnover of at least RON 50,000. For this product, clients don’t have to bring financial documents and the approval process is instant.
The most important benefits are: free installments for transactions higher than RON 1,000, a 45-day grace period and automated renewal. The Credit Card also brings a series of partners which allow 4 to 24 free installments for each transaction.
The costs for this product are: annual administration fee of RON 75 /card and the interest rate of 25 percent/year.
The minimum and maximum limit vary between RON 3,000 and RON 35,000. This product is designed for immediate cash-flow needs of a company or can also cover daily business needs.
The credit line for companies with at least 1.5 years of activity and a turnover higher than RON 30,000. For this product, clients need to bring financial documents.
Costs for this product are: interest rate: ROBOR 1 month +6.5 percent, granting/renewal fees 1 percent, annual administration fee 3 percent.
The financing limit ranges between RON 25,000 and RON 450,000.
This product is designed to cover working capital needed by companies.
Term loan credit for companies with more than 1.5 years of activities and turnover higher than RON 30,000.
Costs for this product: interest rate ROBOR 3 months + 5 percent, granting fee 2 percent.
The financing limit ranges between RON 25,000 and RON 2 million.
This product covers the investing need of the client. For this product the client needs to have collateral guarantees.
“Despite not having funding solutions for start-ups, ING supports the Startarium project, a platform meant to educate and support entrepreneurs with educational content, meetings with mentors and networking, a crowdfunding platform and a business incubator.
Startarium offered entrepreneurial education to over 17,000 entrepreneurs in 2017, and included the first incubation and acceleration program dedicated to startups. The total funding rose up to RON 575,000 allocated to empowering entrepreneurs who were selected through Startarium competitions,” the bank told BR.
Elsewhere, Raiffeisen Bank Romania has launched a competition designed to support start-ups with loans up to EUR 50,000 for each projects.
Entrepreneurs and SMEs that have been operational for less than 2 years can submit their projects by April 22 as part of the bank’s Factory by Raiffeisen Bank initiative.
The loans will be granted through the COSME program, with the guarantees of the European Investment Fund.
Raiffeisen representatives told BR that the maximum amount of EUR 50,000 is enough for most of the entrepreneurs that are just starting a company, with this financing enough to cover the daily needs of a business and potential investments.
“The loans can be investments of overdraft type, and the repayment term can be up to 5 years for investments and 12 months for overdraft with a preferential interest rate. In addition, the selected start-ups will be exempted from the payment of the granting commission and will have a grace period of 6 months,” said the lender, adding that the entrepreneur needs to have his/her own contribution (financial/material resources) to get the financing. Raiffeisen Bank said that entrepreneurs can further save their costs through the current account package for SMEs called IMM Bronze Optim
Banca Transilvania is another lender that is actively looking to finance SMEs in Romania.
The bank has a special credit line for SMEs that develop project in which at least 70 percent of the investment amount is used to acquire equipment made in Romania or services from domestic firms.
This investment loan has an interest rate of ROBOR 6M + 2.5 percent. The granting commission is 0.5 percent, while the monthly management commission stands at 0.05 percent.
In the case of loans for financing the working capital, BT can grant up to RON 500,000 in the case of loans without guarantees. It can be granted in the local currency and has a duration of 24 months.
Meanwhile, the loan facility with guarantees means that BT can grant up to RON 1.5 million in financing, both in the local currency or the euro. It has a duration of 24 months.
For longer term loans, the maximum amount that can be granted without guarantees stands at RON 500,000 for a maximum duration of 60 months. If the borrower provides guarantees, the amount granted can reach RON 1.5 million for a duration of up to 120 months.
BT is also part of the Start-Up Nation program, providing bridge loans for entrepreneurs.
The fixed interest for the loan stands at 3.9 percent per year, while the granting commission stands at 0.75 percent of the loan value. It has to be paid when the loan is first accessed. The monthly management commission amounts to 0.08 percent of the loan’s value. The financing duration is of maximum 18 months.
The financial expenses for the loans/guarantees obtained for the loans taken out by the company to make investments accepted in the accepted investments within the program represent eligible expenses that have to be supported from the granted financing.
Entrepreneurs can join a special program for Start-Up Nation designed by the lender and can receive free access to courses, training and consulting services. Moreover, start-ups that receive financing in this program can be helped by BT to design an online store and marketing services for online promotion.