A survey conducted by Holm Bank has revealed that although almost half of all micro-businesses have abandoned investment plans because of the coronavirus crisis, those which are somewhat optimistic continue to put money towards their futures. The majority of the respondents with such plans are aiming to invest up to 10,000 euros this year and next, but there are also those who are planning to contribute more to the growth of their companies.
The Holm Bank survey was conducted among companies with up to 10 employees. In total, 300 micro-businesses from all over Estonia took part. Of them, 58% responded that they had given up on their investment plans in 2020 – whether putting a temporary freeze on projects or abandoning them altogether – due to the coronavirus crisis.
“Having to backtrack on development plans hurt these companies more during the worst period of the crisis than any reduction in staff numbers or salaries,” explained Rauno Klettenberg, the chairman of the management board of Holm Bank.
Klettenberg added that the outlook among micro-businesses at present is cautiously optimistic. Although 48% of respondents indicated that they still lacked the sense of security they needed in order to invest, the remaining 52% of companies are prepared to weigh up the launching of new development projects this year and next. More than half of the micro-businesses pressing ahead with investment plans aim to invest up to 10,000 euros in such projects in 2021 and 2022.
“Among companies with up to five employees, 10,000 euros was the most common amount earmarked for investment,” Klettenberg said. “It’s in companies with between six and 10 employees that the most plans are being made to invest up to 50,000 euros over the next 16 months. There are very few micro-businesses willing or able to inject 100,000 euros or more into their companies.”
According to Klettenberg, how willing micro-businesses are to invest is a key indicator of the health of the economy, since companies with up to 10 employees form the majority of the undertakings registered in Estonia today.
“Micro-businesses are important employers, taxpayers and drivers of the economy,” he remarked. “We encourage them to talk to their banks, because they don’t necessarily need an enormous amount of money to ensure sustainable operations and growth.” He added that if a company interested in obtaining a loan lacks the collateral required to reduce risks, it can apply through Holm for additional surety from KredEx or the Rural Development Foundation.
Klettenberg stressed that the most important thing in the investment plans of micro-businesses is open and honest communication between the business operator and the bank – because discussing options together often leads to discovering a way to implement your plans. “We offer entrepreneurs flexible solutions that suit their business model and support them personally in applying for loans and in every other aspect of the customer relationship,” he explained.
Holm Bank AS is an Estonian-owned bank with an operating licence issued by the European Central Bank. Holm owns the Liisi trademark, which last year celebrated its 25th anniversary. Holm Bank’s services include Liisi hire purchase, consumer loans and credit cards, as well as Holm business loans and deposit. In 2020, Holm extended its trademark to Latvia and launched its services on the Swedish market.