Working capital still in great demand

According to the latest SME Barometer Survey conducted by the Federation of Finnish Enterprises, Finnvera and the Ministry of Employment and the Economy, enterprises’ willingness to develop their operations and to make investments is reviving. However, financing is still mostly needed for working capital.

Fewer enterprises than before experience that problems on the financial market have affected the terms of financing. Those who felt that the conditions are tightened said that requirements for collateral are now stricter.. Even so, more than one third of recipients still experienced that the general availability of financing had declined.

According to the SME Barometer, financing will be sought more than last autumn not only for the development of enterprises, but also for investments. Industrial enterprises are the most eager to apply for financing from Finnvera. Strongly growth-oriented enterprises also intend to apply for financing from Finnvera more than other types of enterprises. On the whole, the need for Finnvera’s financing will decrease somewhat; this is a sign of normalisation on the private financial market.

In all, 29 per cent of enterprises that plan to take outside financing during the next 12 months intend to apply for Finnvera’s Counter-cyclical Loans or Guarantees. This is 7 percentage points less than last autumn.

“When the recession starts to give way to an upswing, the need for counter-cyclical products might fall. But together with banks and other private financiers, we can grant sufficient financing for the investments and business of enterprises, ,” says Pauli Heikkilä, Managing Director of Finnvera.

Finnvera can grant counter-cyclical financing up to the end of 2011, for a total of EUR 900 million. The amount of counter-cyclical financing granted thus far is about EUR 200 million.

Enterprises’ economy sound when the recession set in

Altogether 18 per cent of SMEs reported that they had experienced liquidity problems during the past three months. This is the same level as last autumn. In the normal situation, the share of enterprises that have had liquidity problems is only 2−3 per cent.

“It’s positive that enterprises report that their principal financiers have often been ready to consolidate financing. However, most respondents (79%) have had no need for rescheduling. This shows that Finnish enterprises entered the recession in a fairly good shape, and their adaptation measures have been successful,” Pauli Heikkilä points out.

Most of Finnvera’s Regional Offices report that new and starting enterprises in their regions are keen to apply for financing from Finnvera. The short-term credit insurance for exports to Western industrialised countries is also in great demand.

“When the economy starts to rise, we also strive actively to provide financing for growing and internationalising enterprises that have the prerequisites for profitable business,” says Pauli Heikkilä.

Additional information
Pauli Heikkilä, Managing Director, tel. +358 20 460 7321
Leena Jaakkola, Senior Vice President, Communications and Marketing, tel. +358 20 460 7272