Unlocking Financial Potential: Refinancing as a Strategy for Latvian Businesses

Many Latvian entrepreneurs are potentially burdened by unnecessarily high loan costs. According to Arthur Geisari, the originator of “Oferta Finance,” a important number of businesses could substantially reduce their financial obligations by simply reassessing their existing loan agreements or exploring choice financing options.

The Data Asymmetry: Banks, EURIBOR, and Entrepreneurial Awareness

A key issue is the lack of awareness among entrepreneurs regarding their rights and options. geisari points out that many business owners are not fully informed about the intricacies of EURIBOR (Euro Interbank Offered Rate) and its impact on their loan interest rates.This information gap can be exploited by banks.While banks are quick to raise interest rates when EURIBOR increases, they are ofen less proactive in lowering them when EURIBOR decreases.

It is often difficult for merchants to track and understand in detail what euribor is and how it affects their loans and banks tend to use this situation.
Arthur Geisari,Oferta Finance

Challenging the Status Quo: Negotiating Better Loan Terms

Geisari emphasizes that entrepreneurs have the right to negotiate better loan terms,and should not fear repercussions for doing so. Exploring options with other banks and seeking more favorable conditions is a legitimate business practise that should not lead to account blocking or blacklisting.

Entrepreneurs should finally understand that these types of activities cannot lead to blocking accounts or inclusion in blacklists – these are customer rights.
Arthur Geisari, Oferta Finance

This proactive approach can lead to reduced monthly payments and lower overall interest costs, ultimately strengthening the company’s financial standing. Such as, a small manufacturing company in Riga recently saved €5,000 annually by refinancing their equipment loan after negotiating a lower interest rate with a different bank.

The Path to Refinancing: Understanding yoru Financial Position

the first step towards securing better loan terms is a thorough understanding of one’s financial situation. This includes a detailed assessment of existing loans, outstanding balances, and overall financial health. If an entrepreneur chooses to engage a credit broker, providing comprehensive financial data is crucial for effective analysis and the development of a tailored refinancing plan. This often involves consolidating existing debts into a single, more manageable loan.

Latvia’s Underutilized Financing Potential: A Call to Action

Despite the potential benefits, financing activity in Latvia remains relatively low compared to other Eurozone countries. It is estimated that Latvia loses approximately EUR 12.5 billion annually due to underinvestment in business development. In the first quarter of 2024, loans to non-financial companies and households in Latvia represented onyl 27.5% of GDP, or EUR 10.9 billion. This suggests a significant untapped potential for economic growth.

Increased access to credit could stimulate the growth of small and medium-sized enterprises (SMEs),leading to increased tax revenues and overall economic development. Geisari argues that entrepreneurs should not be afraid to borrow responsibly, viewing debt as a tool for growth rather then a burden.

Debt is a brother because his money is the most expensive.
Arthur Geisari, Oferta Finance

This sentiment underscores the importance of strategic financial planning and leveraging debt to fuel business expansion.