OREANDA-NEWS. April 06, 2012. There are greater numbers of entrepreneurs in Latvia who plan to invest in their businesses this year than was the case last year, the latest Citadele Index study has shown. The study is produced by the Citadele Bank in partnership with the SKDS public opinion research centre. It also shows that entrepreneurs require more financing from banks in the long term, as opposed to small short-term loans. This confirms plans related to the aforementioned investments, reported the press-centre of Citadele.

Asked about their plans in 2012, 38% of entrepreneurs spoke of buying new equipment or machinery this year, whereas 30% of them had bought such things in 2011. A greater number of entrepreneurs this year than last are planning to offer new goods or services – 38% hope to offer new services this year (as opposed to 25% last year), while 35% are planning to manufacture new products (21% last year).

More likely to buy new equipment in 2012 are manufacturing companies – 52% of representatives of such companies indicated such plans. Companies in the retail industry are more likely to offer new services or products or to develop new directions for their businesses (43% of such respondents said so). Entrepreneurs from Latvia’s regions are more likely to buy new equipment than are their colleagues in Riga (50% in Latgale, 47% in Vidzeme, 45% in Kurzeme, 42% in Zemgale, 37% from the Riga metropolitan area, and 33% from Riga).

Most likely to have bought new equipment in 2011 were construction companies (39% of such respondents). Manufacturing companies were most likely to develop new products or services (30%), while retailing firms were most likely to develop new areas of operations (25%). Asked whether they had bought new equipment in 2011, a positive answer was given by 37% of respondents in Latgale, 36% in Vidzeme, 35% in Kurzeme, 34% in Zemgale, 27% from the Riga metropolitan area, and 26% from Riga.

“Citadele signed loan agreements worth LVL 134 million in 2011 with Latvian companies and individuals, and in 2012 we’re going to continue to offer loans so as to facilitate business development and the country’s economy,” says the head of the Citadele Corporate Services Directorate, Agnese Paegle. “Over the past year, there has been increasing interest among entrepreneurs in loans to implement new products or to expand their businesses, not least in terms of finding new export markets. The largest share of the loans that we have issued as of the end of this March has gone toward the development of businesses.”

The Citadele Index shows that there are fewer companies, which need small loans to regulate cash flow in the short term, but there are more companies, which are seeking larger loans for a longer period of time and at a lower interest rate. Among those respondents who said that they do need a loan, 25% said that they need a small one (27% last year), while 78% said that they would be looking for a larger sum (70% a year ago).

Fewer companies this year than last are seeking loans to increase cash on hand (38% this year, 52% last year), while more companies want financing for new equipment (37% versus 30%) or motor vehicles (21% and 8%). A total of 25% of respondents said that they will need a loan or a credit line in 2012, while 71% said that they will not. Representatives of medium and large companies were more likely to need lending resources. It is also true that representatives of companies with foreign capital alone were comparatively less likely to say that they needed lending resources than were people from companies that are partly or wholly owned by local owners. Similar answers to these questions were also given by those who took part in the Citadele Index study last year.

Where 14% of respondents plan to take out a loan or credit line this year, 10% had such plans last year. Manufacturing companies (17%), retailers (14%) and service sector companies (14%) were most likely to say that they will need a loan or credit line this year.

The survey also shows that 43% of companies have an outstanding loan at this time, while 57% do not. Comparatively more loans are found among manufacturing companies (46%), while comparatively fewer are encountered among building firms (31%).