2014-11-04
The view of enterprises on financing by borrowed funds, as surveyed under commission of the Bank of Lithuania — for the first time over the past two years, the share of enterprises, planning to use external financing sources, exceeded only the number of enterprises planning to use own funds.
“Although, after the crisis, businesses are still financing their activities and investments mostly with own funds, there is an increase in enterprises that plan, for further development, to use also external financing sources,” says Gintautas Garbanovas, economist at the Macroprudential Analysis Division of the Bank of Lithuania's Financial Stability Department.
According to him, the survey of enterprises shows that there is an increase in enterprises planning to expand — their share, according to the latest data, grew by almost 5 p.p. — to 41.2 per cent, while the share of expansion to be financed by borrowed funds — doubled to 21.8 per cent.
For the first time in the past two years the share (54.3%) of enterprises, planning to cover their needs by drawing in external sources, exceeded the share (45.7%) of enterprises financing with own funds.
The survey also revealed that credit institutions satisfied the requests of most enterprises applying to borrow or change the terms and conditions of the agreement: for 59.6 per cent of enterprises that applied, the terms and conditions of the agreement were changed or the entire sum applied for was borrowed.
Non-financial enterprises plan to use borrowed funds mainly for the repair or acquisition of equipment, machinery and vehicles (35.2 %), or acquisition of raw materials or supplies (25.8 %), as well as for the construction, reconstruction, rental or acquisition of real estate objects (18.8 %).
Although more than half of enterprises believe that lending conditions at credit institutions did not change, however the number of enterprises that believed that the conditions had tightened — increased. According to the newest data, 37 per cent indicated that lending conditions had tightened; half a year ago — 20.0 per cent of enterprises.
According to the survey data, enterprises asses slightly more cautiously the future outlook and more often than in earlier surveys indicated higher production costs, decreased financing sources and increased indebtedness of business partners as possible challenges.
The detailed Survey (706.4 KB download icon)of Non-Financial Enterprises on Business Financing can be found on the Bank of Lithuania website.