RESEARCH "The need for financial support for starting or developing a business"

Entrepreneur of the Year 2019, in cooperation with SIA 'SKDS Research Center', conducted a study on the existing and potential needs of the rural regions of Latvia, past experience and future plans for financial loans for business development.

As part of the research, a survey was conducted in 52 parishes and 6 cities in November 2019. The purpose of the survey was the financial needs of existing and potential entrepreneurs in the regions, opportunities for the operation of their company.

314 respondents took part in the survey.

Highlights of the study:

1.A little more than half (53%) of the respondents stated that in the last 3 years, for starting or promoting a business, they have tried to attract finance for the creation or development of a business;

2. As the most frequent types of financial attraction - 43% of those affected turned to the bank, 13% to the non-bank sector (private lenders), ELFLA financing 12%, 10% to the Cooperative Credit Society, ALTUM. 8%, 8% for programs of the State Employment Agency;

3. A third of those criticized, who had turned to the bank, did not receive support due to insufficient security. Often, potential borrowers have refused further funding in the form of a loan in connection with an increased credit guarantee.;

4. 26% of the financial attraction needs were up to EUR 10,000.00. 22% for amounts from EUR 10,001.00 to EUR 20,000.00, 13% from EUR 20,001.00 to EUR 30,000.00, 14% from EUR 30,001.00 to EUR 50,000.00, 8% from EUR 50,001.00 to EUR 75,000.00.

5. Of those survey participants who tried to attract financing for the establishment and development of a company in the last 3 years, 52% wanted to receive it for the activity of a limited liability company, 20% for farms, 18% for the economic activity of a self-employed person.

6. Of all survey participants, 2/3 or 66% indicated the need for financial attraction within the next 5 years for business activation, 39% of them indicated the need for availability of working capital up to EUR 10,000.00, 18% amounts from 10,001, 00 EUR to 20,000.00 EUR. A little more than a third, or 36% of the survey participants indicated a loan term of up to 5 years.

The results of the study have highlighted the activity of entrepreneurs in the rural region, the goals of activity activation and the need to attract funding by looking for a source of funding outside of banks. Especially for the elimination of the consequences of COVID-19, the issue of promoting the competitiveness of small and small entrepreneurs has been activated (Annex 1 of the European Commission (EC) Regulation No. 651/2014. Availability of short-term work EAFRD project capital, co-financing or pre-financing (especially for LEADER projects for amounts up to 20 000.00 euros with an average support intensity of 70%), postponement of the basic amounts of funding for employees' households or extensions of repayment terms (on average for amounts up to EUR 5,000,000,000).

The research was carried out within the framework of the ELFLD project "Regional finance for a regional enterprise" (project no. 18-00-A019.332-000005).