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Credit Guarantees

Credit Guarantees

The purpose of the credit is to ensure that a merchant obtains credit in order to perform commercial activities in situations, when the merchant does not have in his possession security for obtaining sufficient credit in the required amount.
Export Credit Guarantees

Export Credit Guarantees

An export guarantee is a commitment by the LGA in a situation, if a foreign buyer does not make a deferred payment regarding delivered goods or services in the specified time period. In such a case the LGA agrees to compensate the exporter (or the bank or factoring company which financed the exporter).
Mezzanine Loan

Mezzanine Loan

A mezzanine loan is a long-term loan, which is one with a raised credit risk, which is subordinated in relation to the loan issued by the bank and is enhanced with a lower level of security than a bank loan.
Risk capital

Risk capital

Risk capital is long-term investment into an enterprise’s unlisted equity or provision of equity related loan with the purpose of supporting its rapid growth and development.
Microloans

Microloans

Microloan is a medium term business loan mainly used to finance working capital or investments in fixed assets.

Dictionary of terms

Credit Guarantee

A credit guarantee is the LGA commitment to a commercial bank to compensate for its losses in the case, where the merchant does not repay the bank loan.

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Credit Guarantee Amount

The amount of the guarantee is the total amount of the LGA credit guarantee commitment, up to which a commercial bank is compensated for covering its losses.

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Credit Guarantee Premium

A credit guarantee premium is the premium payment that is paid to the LGA for the credit guarantee issued one a year for the following year.

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Deferred payment term for export credit

The deferred payment term for export credit is that time period, when the buyer has to settle up for the received goods or services.

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Export Guarantee

An export guarantee is the LGA commitment meet the losses of a merchant (or those of their financing commercial bank) in the case, if the foreign buyer of the merchant’s exported goods or services has not made payments in the specified term.

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Export Guarantee Amount

The amount of the export guarantee is the total amount of the LGA export credit guarantee commitment, up to which the merchant (or their financing commercial bank) is paid out as compensation for covering their losses.

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Export Guarantee Period

The export guarantee period is the time period, for which the LGA assumes a commitment for the export credit guarantee for the performance of the delivery of goods and services by the Merchant. For export transactions with permanent deliveries the export guarantee term s one year, with the possibility to extend it at the end of the term.

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Mezzanine Loan

A mezzanine loan is a long-term loan issued by the LGA, which is subordinated in relation to the loan issued by the bank and is enhanced with a lower level of security than a bank loan.

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Risk capital

Risk capital is long-term investment into an enterprise’s unlisted equity or provision of equity related loan with the purpose of supporting its rapid growth and development. Risk capital investment can be attracted at any stage of enterprise development. If you have great business idea, but lack necessary financial resources to execute it, and also lack necessary collateral to attract debt financing, you can try risk capital. If you own successful enterprise, but high debt/equity ratio prohibits attracting additional debt finance, risk capital can be solution here as well. More extensive explanation on risk capital can be found here http://www.lvca.lv/en/what-is-risk-capital

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Structural Funds

A Structural Fund is a financial instrument established by the European Union, which supports several measures, amongst those there are also financial support services provided by the LGA, for decreasing the differences in the development levels of different regions, ensuring long-term financing.

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Subsidy equivalent

A subsidy equivalent is the benefit gained by the merchant from the support provided by the LGA calculated in money terms. In the case of a credit guarantee it is the difference between the LGA guarantee premium rate and the rate, which would be applied after the principles of commercial markets. Similarly in the case of a mezzanine loan it is the difference between the LGA mezzanine loan interest rate and the rate, that this loan might get on the private market.

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Term of the Credit Guarantee

The term of a credit guarantee is that time period, when the merchant does not repay a bank loan; the LGA compensates the commercial banks’ losses. Normally the credit guarantee term coincides with that of the final payment term of the bank.

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Stream Networks

The LGA credit guarantee helped us to move forward without slowing down, to move with the tempo, that we wanted to. In analogy terms, the LGA was a hidden force, which let one enter the markets and move at the pace dictated by the competition. Often enterprises want to and are capable, but can’t, as they have no fuel in their tanks. The LGA is the one, which pours in this fuel and also does it quickly.
Stream Networks 1
Stream Networks 2
Stream Networks 3

SAF Tehnika

I would recommend to entrepreneurs – that if there is a desire to enter new export markets, but the risk appears too great, then an export guarantee is one of the tools, which is worth looking at, when one is looking for solutions as to how to decrease risk. As well the bureaucratic procedure is neither time consuming, nor complicated.
SAF Tehnika 1
SAF Tehnika 2
SAF Tehnika 3

Lenek

We first heard of the services of the LGA on the Internet, while searching for options, of how and with what we can do something for the benefit of our enterprise. We came across information regarding the LGA, got in touch with them, entered a contract and we are now working together.
Lenek 1
Lenek 2
Lenek 3