Romanian banks are looking to expand their financing facilities for small and medium-sized businesses in Romania, while some of the lenders have increased their presence in the local start-up ecosystem.
BR spoke to some of the biggest banks in Romania to learn about their strategy for financing entrepreneurial businesses. Here are some of the costs that entrepreneurs should consider if they want to use the banking system for financing.
RBC, Romania’s largest bank in terms of assets, has several financing options such as investment loans, bank guarantee loans, working capital loans and pre-financing loans for APIA grants (in the field of agriculture).
The loan for the financing of working capital has an interest rate between 5% and 6.5% + ROBOR 3/6 months, depending on the length of the loan
the investment loan is based on an interest rate between 3.5% to 6% + ROBOR 6 months, depending on the results of the company.
The pre-financing of the APIA is based on an interest rate of 2% + ROBOR 3 months.
BCR has stated that some of the facilities for a checking account are free in the case of Start-Up. This does not include any fees for monthly account administration, free Internet banking services, and no fees for debit card administration. The bank added that it was offering a 23% discount for the electronic signature package.
Meanwhile, CEC Bank, the public lender, says it has a wide range of financing facilities for start-ups.
The bank provides investment loans under the government’s Start-Up Nation program – loans for ongoing operations and bridging loans.
In the case investment loans, the duration of the financing starts at six months and can reach 10 years. The loan period can be extended to 15 years provided that the duration of the investment is equal to or greater than the loan period.
The grace period for loans can be up to 3 months for short term loans and up to 6 months for medium term loans. For long-term financing, the grace period can increase up to 12 months.
The value of the loan can reach 85% of the value of the investment, while the borrower’s contribution can be in cash or in kind. The loan can be taken out in local currency / foreign currency and can include any type of collateral or a combination of collateral accepted by the bank.
The repayment schedule can be established with the bank and the interest rate is paid monthly.
“These terms can be negotiated depending on the creditworthiness of the customer, the turnover and the economic and financial indicators of the company,” CEC Bank told BR.
Another type of loan can be used to cover financing needs in working capital and for the refinancing of other lines of credit with other financing institutions.
It is aimed at any company with good payment behavior vis-à-vis the State, business partners and credit institutions. The amount of the loan will be correlated with the company’s working capital requirement, its financial cycle and its repayment capacity.
It can be granted in Romanian currency, US dollar or Euro and has a maturity of 24 months with an option to extend repayment.
Any guarantee or combination of guarantees is accepted by the bank. The repayment period can be permanent, during the period of validity of the line of credit.
the bridging loan as part of the Start-Up Nation initiative has a maximum duration of 24 months and can amount to 200,000 RON. It can be granted in local currency.
The interest rate for loans granted during the 2018-2020 period is set at 3.99% per annum. The analysis fee for this loan is 0, while the management fee is 0.75% of the loan value, payable at maturity. The loan granting commission is 0.75% of its value, payable at maturity. There is no commission for the prepayment of the entire loan.
The guarantee issued by the National Credit Guarantee Fund for SMEs will cover up to 80% of the loan, while the rest may be covered by real guarantees (including goods financed under the project with a few exceptions) . Insurance policies for property acquired through Start-Up Nation can also serve as collateral as well as a mortgage on the company’s current accounts opened at the bank in any currency.
CEC Bank also offers the IMM Start-Up package which 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 activity.
Business credit card for companies with at least 12 months of activity and a turnover of at least RON 50,000. For this product, customers do not have to bring financial documents and the approval process is instant.
The most important advantages are: free payments for transactions over RON 1000, a 45-day grace period and an automated renewal. The Bank Card also provides a series of partners that allow 4 to 24 free payments for each transaction.
The costs of this product are as follows: annual administration fee of 75 RON / card and the interest rate of 25% / year.
The minimum and maximum limits vary between 3,000 RON and 35,000 RON. This product is designed for the immediate cash flow needs of a business or can cover daily business needs as well.
The credit line for companies with at least 1.5 years of activity and a turnover exceeding 30,000 RON. For this product, customers must bring financial documents.
The costs for this product are as follows: interest rate: ROBOR 1 month + 6.5%, grant / renewal fee 1%, annual administration fee 3%.
The funding limit varies between 25,000 RON and 450,000 RON.
This product is designed to cover the working capital needed by businesses.
Term loan for companies with more than a year and a half of activity and a turnover exceeding 30,000 RON.
Costs for this product: ROBOR 3 month interest rate + 5 percent, 2 percent grant fee.
The funding limit is between RON 25,000 and RON 2 million.
This product covers the client’s investment need. For this product, the customer must have collateral guarantees.
“Despite the absence of financing solutions for start-ups, ING supports the Startarium project, a platform intended to educate and support entrepreneurs with educational content, meetings with mentors and networking, a crowdfunding platform and a business incubator.
Startarium offered entrepreneurial training to more than 17,000 entrepreneurs in 2017, and included the first incubation and acceleration program dedicated to startups. The total funding amounted to RON 575,000 allocated to empower the entrepreneurs selected in the Startarium competitions, ”the bank told BR.
Elsewhere, Raiffeisen Bank Romania launched a competition to support start-ups with loans of up to 50,000 euros for each project.
Entrepreneurs and SMEs that have been operational for less than 2 years can submit their project before April 22 as part of the Factory by Raiffeisen Bank initiative.
The loans will be granted under the COSME program, with guarantees from the European Investment Fund.
Raiffeisen representatives told BR that the maximum amount of € 50,000 is sufficient for most entrepreneurs who are just starting a business, as this funding is sufficient to cover the day-to-day needs of a business and potential investments.
“Loans can be overdraft type investments, and the repayment term can be up to 5 years for investments and 12 months for overdrafts with a prime interest rate. In addition, the selected start-ups will be exempt from paying the granting commission and will benefit from a grace period of 6 months ”, specified the lender, specifying that the entrepreneur must have his own contribution (financial resources / hardware) to obtain financing. Raiffeisen Bank said entrepreneurs can still save costs with the current account package for SMEs called IMM Bronze Optim
Banca Transylvania is another lender actively seeking to finance SMEs in Romania.
The bank has a special credit line for SMEs who develop a project in which at least 70 percent of the investment amount is used to acquire equipment made in Romania or services of national companies.
This investment loan has an interest rate of ROBOR 6M + 2.5%. The allocation fee is 0.5 percent, while the monthly management fee is 0.05 percent.
In the case of loans for the financing of working capitalBT can grant up to RON 500,000 for unsecured loans. It can be granted in local currency and has a duration of 24 months.
At the same time, the secured loan facility means that BT can provide up to RON 1.5 million in financing, both in local currency or in euros. It has a duration of 24 months.
For longer term loans, the maximum amount that can be granted without guarantee is RON 500,000 for a maximum period of 60 months. If the borrower provides guarantees, the amount granted can reach 1.5 million RON for a period of up to 120 months.
BT is also part of the Start-Up Nation Program, provide bridging loans to entrepreneurs.
The fixed interest rate on the loan is 3.9% per annum, while the granting commission is 0.75% of the loan value. It must be paid during the first access to the loan. The monthly management fee is 0.08% of the loan value. The duration of the funding is a maximum of 18 months.
The financial charges for loans / guarantees obtained for loans taken out by the company to make investments accepted in the investments accepted within the program represent eligible expenses which must be borne by the financing granted.
Entrepreneurs can join a special program for Start-Up Nation designed by the lender and can benefit from free access to courses, training and consulting services. In addition, start-ups that receive funding under this program can be assisted by BT to design an online store and marketing services for online promotion.