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Long-term Loans
Long-term loans are meant for acquisition of fixed assets, purchase, construction or renovation of real estate as well as for launching new business projects.
The loans can be obtained in EUR or USD.
The minimum loan amount: - For corporate customers, residents of Latvia: EUR 200 000 (or the equivalent in USD).
- For corporate customers, non-residents of Latvia: EUR 1 000 000 (or the equivalent in USD).
Real estate, manufacturing equipment and other fixed assets as well as inventory and receivables can be considered by the Bank 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% | | Accounts receivable | 50% |
* 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 building, a territory for building commercial centres and complexes.
*** If the borrower's income is sufficient to repay the loan and the sale of the collateral is not the only source of the loan repayment.
If real estate is pledged as 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, Eiroeksperts, Colliers International, etc.
New project financing
In case the purpose of the customer’s loan is to develop a new project, including building or renovation of the real estate, the loan amount can reach up to 70% of the project implementation costs.
The Bank then grants the loan in parts in accordance with the project implementation schedule. The Bank calculates the loan interest on the loan amount already disbursed.
A grace period for the loan repayment is possible. For instance, the Bank can set a loan principal grace until the constructed real estate is put into exploitation.
Interest rates
Long-term loans are granted with a flexible interest rate, formed from the flexible part (London Interbank Offered Rate, i.e. LIBOR) and the fixed part that depends on the risk level of each particular project, financial status of the company, collateral liquidity and other factors.
For loans in EUR, the flexible rate 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 can set the minimum level for the loans with the flexible interest rate. At present, the minimum cumulative level of the rate applied to loans in USD and EUR can be starting from 7% p.a.
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 loan 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.
The following documents have to be submitted in case the customer is planning construction of the real estate:- Approved technical/sketch project;
- Title Deed/Documents confirming property rights to the land on the real estate is planned to be built;
- Construction cost estimate;
- Agreement (or draft agreement) with a general construction, copy of the general constructor’s license;
- Construction permit.
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