Head of AS Expobank Credit Division Staņislavs Samohvalovs:

“For the development of the company, incl. for replenishment of fixed assets, modernization, purchase of real estate, construction, repair or increase of working capital, companies may apply for the bank’s funding. By receiving a loan, entrepreneurs can promote the development of their business, conquer new export markets, expand production, increase their competitiveness, but there are several recommendations that should be taken into account to make cooperation with the lending bank as successful as possible.”

Fair commercial practice and cooperation not only with the bank

It is important for any lender that the entrepreneur who has received the funding implements a fair commercial practice. In its relations with the bank itself, cooperation partners and suppliers of goods or services, the company must comply with the rules of fair cooperation. Corruption must also be prevented and it is necessary to comply with legal requirements regarding the payment of taxes and assimilated payments, avoiding tax and invoice debts.

Detailed information about the company’s business and transactions

There is a substantial justification for all the requirements that banks impose on companies. Entrepreneurs often find it inconvenient that they have to provide banks with wider and more detailed information about the company’s business and transactions, but it should be borne in mind that this is a very important aspect of banking and also related to anti-money laundering and anti-terrorist financing requirements. When it comes to providing information to the bank, in order to save time for all parties involved, it is recommended to specify in advance to your manager what information, in what format and within what deadlines should be submitted. Here, the advantage will clearly be for those entrepreneurs to whom credit institutions offer an individual approach. Usually in small banks, such as Expobank, it is possible to provide each credit customer with such an approach, which ensures much greater speed and quality in discussing and resolving any issue.

Careful and prudent cash flow planning

When using lending services, every company must monitor and plan the financial flow. Careful and prudent cash flow planning helps the company not only reconcile its income with expenses, but also adhere to the interest and credit repayment schedule. It also helps the company to objectively assess its ability to take on additional credit liabilities. When making financial projections, it is important to remember that a company’s long-term investments, expenses or investments may affect its cash flow positions and to carefully assess whether this will result in a short-term or long-term liquidity shortfall. However, even with scrupulous analysis and a detailed financial plan, changes can take place that the company itself cannot influence – sometimes that do not fit into normal financial planning. If such changes have taken place, it is important for the company to analyse the reasons, possible solutions and inform the lending bank in a timely manner, detailing the situation. In case of a situation of particular pressure, the readiness to look for a solution together is important, but not avoiding the lender. The more flexible the financial institution, the greater the chances of agreeing on a loan restructuring, changes in the repayment schedule.

Refinancing of liabilities

Entrepreneurs should also be aware that if it is difficult to find a joint solution with a financial institution in which there is credit liabilities, there is a possibility to refinance or restart these liabilities. In essence, this means the possibility of creating new conditions and a new repayment schedule, adapted to the company’s current and predictable cash flow, with new interest rates depending on the risk level of each specific project, the company’s financial position, collateral liquidity, etc.. It is possible to use the previous one for credit collateral for new liabilities, sometimes even releasing or pledging other real estate, equipment, inventories, receivables, etc..

If the company is open to cooperation with the bank and follows its own financial flow, perceiving the bank as a full-fledged business partner, credit liabilities are not a burden, but an opportunity for the company’s development and innovation.


For more information please contact
Anna Andina
Head of PR and marketing at AS Expobank

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