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Credit Line Facility
Credit line – a credit-revolving product suitable for business in need to improve its short-term cash flow and increase working capital (e.g., to purchase new goods).
Credit line provides your company with the opportunity to use own current assets alongside with the loan facilities within the limit of the granted credit line, repaying the loan facility whenever it is suitable for the company (in accordance with the loan agreement conditions). Thus, you may get more attractive terms of payment for goods as well as buy goods payable in advance.
Rietumu Bank offers two types of credit lines:
- Credit line with acceptance, when your account is replenished on the basis of a written request, and interest is paid once per month;
- Credit line without acceptance (overdraft), when your account is replenished automatically and interest is paid daily.
If you use Rietumu BankWorld system, you can monitor how own and borrowed financial resources are used in your company and check all transactions using the credit line.
Credit lines and overdrafts can be granted in EUR or USD with a term from half a year to one year.
The minimum credit line amount - EUR 500 000 (or the equivalent in USD), while the maximum amount of the credit facility – average 2-3 months turnover of the company.
Real estate, manufacturing equipment and other fixed assets as well as inventory and receivables may serve as a collateral.
Maximum amount of financing depending on the collateral type:| Collateral type | Amount of financing |
| Real estate * | 70% of market value |
| Land * ** *** | 50% of market value |
| Manufacturing equipment and machinery | 60% |
| Other fixed assets | 50% |
| Trade inventory | 50% |
| Goods publicly traded in global markets | 80% |
| Accounts receivable | 50% |
| Factorised accounts receivable | 90% |
No more than 90% of the liquidation price.
** If land (territory) is being used as: a territory for building a residential real estate property, a territory for mixed purpose property, a territory for industrial and manufacturing buildings, a territory for building commercial centers and complexes.
*** If the borrower's income is sufficient to repay the loan and sale of the collateral is not the only source of the loan repayment.
If real estate is pledged as a collateral, it is necessary to make an appraisal of its value. Rietumu Bank offers its customers appraisal services of the following real estate agencies: Latio, Nira Fonds, Arco Real Estate, Colliers International, etc.
Interest rates
Credit line can be granted both with a fixed and flexible interest rate, formed from the flexible part (London Interbank Offered Rate, i.e. LIBOR) and the fixed part.
Flexible interest rate for loans in EUR is calculated starting from 3M LIBOR EUR + 4%, for loans in USD – from 3M LIBOR USD + 4% p.a.
At the same time, the Bank reserves the right to set the minimum level for the loans with the flexible interest rate. Presently, the minimum cumulative level of the rate applied to loans in USD and EUR can be starting from 8% p.a.
Fixed interest rate for loans in EUR and USD is calculated starting from 9% p.a. Maximum fixed rate for loans in EUR and USD equals 12% p.a.
Fixed and flexible interest rates depend on the risk level of the particular project, financial status of the company, collateral liquidity and other factors.
Specified loan interest rates refer to loans for Latvian residents. Lending terms for Latvian non-residents are considered on individual basis.
Documents required for the credit line request:
- Certificate of Incorporation;
- Articles of Association with all registered amendments and alterations;
- A reference from the Enterprise Register, confirming the signatory power of the company’s representative(s);
- The passport of the person having the signatory power;
- Tax Clearance Certificate;
- Annual Report (full version) for the previous two years with a stamp of State Revenue Service;
- Balance Sheet and Profit & Loss Statement for the current year with Balance Sheet breakdown including receivables, savings, fixed assets, liabilities);
- VAT declaration for the previous two tax years and for the last month with stamp of State Revenue Service;
- Documents confirming property rights of the pledged property (title deed);
- Collateral appraisal issued by a certified appraiser;
- Business plan;
- Cash flow forecast for the loan period.
