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Estonian Enterprise Policy
Estonian Enterprise Policy
I Estonian Enterprise Policy 2007-2013
Fields of Action
Supporting DEVELOPMENT of KNOWLEDGE and SKILLS
Supporting INTERNATIONALISATION
Supporting INVESTMENTS Supporting DEVELOPMENT of LEGISLATION
Development of Knowledge and Skills
Measures:• Training grants• Awarness of enterprise• Diagnostics` instruments• Quality of management• Consulting• Mentoring• Practice grants
Supporting Investments
• Start-up grant and start-up loan• Investment grants for renewal technology• Venture capital fund • State guarantee for loans and leasings• Contact moderation between investors and
enterprises• Supporting infrastructure investments• Development of investor networks
Internationalisation
Measures:• Export-plan program• Export consortiums• Services for foreign investors• Fair grants• Support for R&D actions
Development of Legislation
• Evaluating the effect of legislation for enterprises• Co-operation with enterprises, enterprise`s
organisations and public at creating new laws and documents
• Unified contact-centres for rebating red tape and simplifing procedures for enterprises
Gages
Indicator Comment Base level
(year)
Achieved level 2008
Target level 2010
Target level 2013
Activity Enterprises per 1000 capita
30 (2004)
42,5 43 48
Enterprise survival rate Enterprises that operate 3 years after establishment
57% (2003)
67,4% 63% 70%
Enterprises`productivity Productivity per capita according to EL 27
50,6% (2004)
61% 63% 72%
Estonian position at IBRD`s research about legal environment “Doing Business”
Comparison 183 states and evaluating regulations that may restrict development of entrepreneural environment
16 (2005)
24 (2009)
18 Estonia`s positions
in 15 best
states
II Support package
Short term challenges for businesses
• Liquidity
• Cutting of costs
• Access to finance
Financing activities is complicated
• Banks are very conservative, not easy to get decisions• Value of collateral decreasing• Interest rates not favourable• Difficult to renew loans• Decisions are changed• Difficult to get factoring limits
• Environment-, infrastructure-, and other projects financed by EU in need for cofinancing
Big interest to export guarantees
• Markets are uncertain• Private insurers have raised prices and reduced limits
• Companies are searching new markets• New chances
• Interest for factoring significantly higher• Hard to get payment deadline for Estonian import
• KredEx provides export guarantees, - outside OECD and EU or - finance period 2 years and more
State measures for recovery
A. Changing the conditions of already existing measures
B. Export guarantees
C. Project-based financing together with banks
D. Additional subordinated loan
E. Credit-lines for banks
State intervention main principles
• Targeted to strengthen companies international positions• Relieves financing problems, business risks are covered
by entrepreneurs• Only sustainable companies can get help, all companies
are examined separately • Target group is exporting companies• Patient money but not for free• Most of all financing deal, not cost• Cannot endanger euro• State interventions are temporary, exit is planned• Intervention must be sufficient to have macroeconomic
influences
A. Changing the conditions of already existing measures
• Guarantees for loan and bank guarantees - Loan guarantee limit increased by 700 mln kr (800 mln to 1.5 Bln Kr), large-size of companies was also added to target group
• Start-up loan – Guaranteed loans amount increased by 500 000 kr (500 000 kr to 1 bln kr), target group expanded up to 3 years old companies
• All measures implemented by Enterprise Estonia were also looked through in purpose to meet enterpreneurs needs in new economic situations and avoid bureaucracy.
B. Export guarantees
• Creating a private law based credit insurance
company • Insurance company offers national export guarantees
as well as market-based export guarantees • Creating the insurance company helps to diversify
risks, involve more competence in the development of export insurance area and to meet better entrepreneurs needs
• Export guarantees limit increased by 2 Bln kr (1 Bln to 3 Bln)
C. Co-financing bank loans
• Project-based cooperation with banks
• Only sustainable and export targeted projects are suitable.
• Longer payment periods
D. Subordinated loan
• Company receives subordinated loan• Due to loan banks are more likely to finance company,
better loan managing• When problems occure, bank loan is paid first,
subordinated loan is secondary• Subordinated loan has lower fixed interest + additional
interest based on the success (calculated on revenue or profit)
• Subordinated loan provider doesn't participate in management, is not a shareholder or partner
E. Credit-line to banks
1 State resources(capital or loan) 2 Finance markets (loan)
KredEx1200 mln
State400 mln
Additional funds800 mln
Swedbank SEB …..bank …..bank
CompanyCompany
Company
CompanyCompany
Company
3 Low-interest loans for banks, KredEx/state will cover bank risks
4 Loans to companies. Bank will add marginal and cover compny credit risk
3 State guarantee against bank bankrupcies
State
Complete packageMeasure Size of
measure, mln kr
State contri-bution, mln kr
Financial cover
No of comp. covered (average amount to one company)
Employ-ment
Export volume, mln kr
Social and income tax 2009, mln kr
Implemen-tation
A. Loan guarantee limit increased by 700 mln kr
(800 mln to 1.5 Bln Kr)
1167 0 No need for additional
funds
350 small-cap companies (2
mln guarantee/3.3 mln loan)
2800 3442 Law enforced by the parlament in
the middle of may
B. Export guarantees limit increased by 2 Bln kr (1 Bln to 3 Bln)
2000 500 200 mln ERDF
200 mln RE (finance
deal)100 mln KredEx
550 (3.5 mln) 24200 14522 Dependent on creating a private law based credit
insurer (III quarter of the
year)
C. Long term loan in association with banks
400 400 1.2 BlnERDF
(Innovation and growth capacity of enterprises, priority axe)
30 mid- or big-cap companies
(12.5 mln)
4770 2179 Launched in the middle of may
D. Subordinated loan based on success
1333 400 200 (6 mln) 8800 5281 Launched in aprill
E. Credit-line for banks with state guarantee
1200 400200 (6 mln) 8800 5281
Readiness in the end of august
Total 6100 1700 1330 49370 30705 3437
Long term challenges not changed
- Higher productivity
- More sophisticated products and services for more up-scale markets
- New knowledge and skills base
- More ambition in internationalisation and export
Current usage of SF resources
- Obligations: totally ca 4 453 milj - 75,8%/period budget
- Payments: totally ca 1 582 milj - 26,9%/ period budget
Sinu logo
Current usage of support package
• Subordinated loan – 14 projects=121 mln (total 400mln)• Project-based cooperation with banks – contracts over
207mln+100mln in proceeding (total 400mln)• Credit line for banks – EIB loan, 2 contracts with banks=1,2bln
EEK
Guarantees are needed > 100mln from project-based resources to loan guarantees for enterprises.
Next year focuses
- Enhance the usage of current measures
- Interim evaluation of measures
- New actions in entrepreneurial education
- Funding for young innovative enterprises
