Foreign partners don’t trust Estonian entrepreneurs
Archived Articles 21 Jan 2009  EWR
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Foreign goods and commodity sellers demand advanced payments from Estonian companies and a national guarantee from Kredex isn’t enough, Äripäev writes.

Latvian and Lithuanian companies face the same problem.

A majority of Estonian companies have dealt with the problem – it’s quite ordinary ifa foreign company asks for up to 70 pct of payment in advance, sometimes 100 pct for goods and services and businessmen claim it is becoming more common. Even if the relations with partners have been good for a long time.

The need for goods makes entrepreneurs go to banks, who often refuse giving a loan.
“They don’t give us a loan, even if we offer additional securities. Also a security from Kredex isn’t enough, because they secure up to 75 pct, but 25 pct may still be too risky for the bank,” a businessman noted.

One of the biggest problems is that the banks don’t secure the bills anymore, but insurance companies have made requirements more stringent. There have been cases when European insurance companies leave all Baltic companies without insurance, just like Atradius and Hermen have done. The reason is in the region’s negative ranking.

“Purveyors’ banks and insurance companies have marked Estonia, Latvia and Lithuania as high-risk countries and they don’t allow to finance us anymore,” Raivo Vare, a transit businessman said.
If things go well they find another insurance company or find an agreement with long-lived partners and they’ll carry the risks.

Companies go through difficult process to get a short-term loan from bank for banks are into refined conservatism this and probably for several other seasons as well. That is also when it comes to leasing devices, short-term loans, extending credit period, factoring and getting a shipping security.
In current difficult situation it’s understandable the banks are more careful when analyzing company’s payment abilities. But many businessmen are convinced the banks are too careful.
“Actually the banks don’t want to give any money, for instance basing it on unreality."

Business News Channel Estonia
Marge Tubalkain-Trell

January 19, 2009
 
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