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There are a several possibilities for financing a business in Estonia. The main financing sources can be categorised as:
However, at the moment debt financing is the prevailing financing option on the Estonian market.
Debt financing is basically an acquisition of funds by borrowing. In Estonia, debt financing is mainly provided by commercial banks. Major banks of Estonia offer a large range of services, whereas smaller banks concentrate on a specific range of services.
The Estonian commercial banking market is divided by four major banks, all with foreign capital:
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Swedbank (Swedbank Group) with the biggest market share;
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SEB Bank (SEB Group);
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Nordea Bank Finland PLC Estonia Branch;
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Danske Bank A/S Estonia Branch.
In total there are seven licensed banks and 11 branches of foreign credit institutions in Estonia.
Debt financing provided by banks can be divided into two categories, based on the type of loan you are seeking: short term debt financing and long term debt financing.
Short Term debt financing is essentially to provide capital deficit businesses funds for a short-term period of no more than a year.
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An Overdraft is a short-term credit that is bounded to the company's current bank account. It allows the company to withdraw or spend more money than it has, up to an agreed limit, known as the "overdraft limit". An overdraft is designed to meet the liquidity needs and balance irregular cash flow.
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Working Capital Loan (current capital loan) is a special purpose loan for short-term financing of additional needs in working capital.
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Loan for agricultural enterprises is provided for companies in cooperation with the Rural Development Foundation (RDF). Credit institutions are granting financing for primary producers in the agricultural sector and issuing loans on favourable conditions. The purpose of this loan is to support agricultural producers and other undertakings operating in rural areas to assure better access to financial resources that are needed for development of the economic activity.
Long Term debt financing is a form of financing that is provided for a period of more than a year. Long-term financing services are provided to those business entities that face a shortage of capital.
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Investment loan is a long-term loan, the purpose of which is financing new projects such as acquisition of fixed assets or building office, warehouse or production facilities. The financed period for investment loans varies depending on the credit institution, but usually does not exceed 15 years.
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Start-up loan is meant for companies just starting in business that often have no strong assets. A start-up loan enables an entrepreneur to manage the business- and loan-related risks, as in comparison with ordinary loans they have to take smaller risks with their own property.
Most of these loan types require collateral in order to secure the credit institution's financing; in addition to a mortgage, the company can apply to Kredex for supplementary collateral to the extent of up to 75% of the credit amount.
Kredex: http://www.kredex.ee/en/
In the case of a rural life and agriculture loan, the company can apply to the Rural Development Foundation http://www.mes.ee/en
These guarantees are meant for small and medium-sized enterprises that are just beginning their business or cannot secure a bank loan.
In addition to the above-mentioned services, credit institutions also provide car and equipment leases and factoring services.
Additional information
Estonian Banking Association: http://www.pangaliit.ee/en/welcome
Bank of Estonia: http://www.eestipank.info/pub/en/yldine/pank/finantskeskkond/kommertspangad/Lits_index.html
Biggest banks
Swedbank: https://www.swedbank.ee/business/finance?language=ENG
SEB Bank: http://www.seb.ee/en
Nordea Bank Finland PLC Estonia Branch: http://www.nordea.ee/Corporate+customers/Financing/67252.html
Danske Bank A/S Estonia Branch: http://www.sampopank.ee/en/23967.html |
Financing a business 
