Cristi Tudorescu, financial consultant for MKOR, has conducted an analysis of the profile of companies applying for the government business support program, IMM Invest.
The National Credit Guarantee Fund for SMEs (FNGCIMM) has completed processing the applications received in the first week since the program’s launch.
Based on the data available on Confidas.ro, Cristi Tudorescu conducted an analysis of the profile of companies that applied on the first day for this type of state support.
At the time of writing, the analyzed applications represented approximately one-third of the total applications received in the first week.
Profile of companies applying for IMM Invest, April 2020
Regarding the field of activity, most applications for state-subsidized loans came from companies in retail (trade) and the manufacturing industry. Also, construction works and the HoReCa sector, where we also included travel agencies, have significant shares.
| Field of activity (CAEN groups) | No. of registered companies | Share |
|---|---|---|
| Wholesale trade (46) | 2,306 | 15.2% |
| Manufacturing industry (1, 2 and 3) | 2,251 | 14.8% |
| Construction works (41, 42 and 43) | 1,685 | 11.1% |
| Retail trade (47) | 1,535 | 10.1% |
| HoReCa and Tourism (55, 56, 79) | 1,264 | 8.3% |
| Total top 5 fields of activity | 9,041 | 59.4% |
From the perspective of turnover, almost 87% of the first day’s applicants are companies with an income of maximum 10 million RON. The data were reported based on the 2018 or 2019 financial statements, where these have already been filed.
Generally, these are micro-enterprises, as defined by European legislation, with a maximum turnover threshold of 2 million euros and fewer than 10 employees.
| Turnover | No. of registered companies | Share |
|---|---|---|
| 0-1 million RON(46) | 6,850 | 45.1% |
| 1-5 million RON | 4,832 | 31.8% |
| 5 – 10 million RON | 1,483 | 9.8% |
| 10 – 50 million RON | 1,748 | 11.5% |
| Over 50 million RON | 269 | 1.8% |
Following the quality of the applicant companies so far, more than two-thirds (67.9%) of the applicants have a low risk score, of over 6 out of 10. This score reflects higher chances for companies to qualify for a working capital loan and/or an investment loan, from the perspective of the financing banks. The scoring was calculated using the ConfiRisk tool, which Cristi Tudorescu developed together with those from Confidas.
The ConfiRisk scoring is illustrated on a scale from 1 to 10, where the 8 – 9.9 range belongs to companies with very low risk for business partners, whether they are financial or commercial creditors. At the opposite pole, companies with a ConfiRisk below 2 present a major risk for long-term creditors, usually being companies with losses and/or negative equity.
In contrast, 14.7% of the analyzed applicant companies have negative equity on their balance sheet. In their case, the chance of bank-type financing is the exception rather than the rule.
Although the loans through the SME Invest program will be guaranteed up to 90% by the Romanian state, banks are expected to apply their lending policies in a prudent manner, so that the financing granted is sustainable for the respective businesses.
| ConfiRisk | No. of registered companies | Share | Profile | Details |
|---|---|---|---|---|
| 8 – 9.9 | 3,305 | 21.8% | very low risk | Profitability and liquidity allow for timely debt settlement. |
| 6 – 7.9 | 7,001 | 46.1% | low risk | The financial situation allows for the fulfillment of obligations. In case of delays, they are manageable. |
| 4 – 5.9 | 2,611 | 17.2% | moderate risk | The company may encounter difficulties in meeting short-term obligations. |
| 2 – 3.9 | 373 | 2.5% | significant risk | Frequent difficulties in meeting obligations, extension of commercial credit to risky levels. |
| 0 – 1.9 | 1,892 | 12.5% | very high risk | Does not meet the criteria for long-term financing. |
If you want to apply for SME Invest…
The IMM Invest program application will remain open until December 31, 2020, and has an allocated ceiling of 15 billion lei for loan guarantees.
Cristi Tudorescu recommends that entrepreneurs talk to the bank or banks they already work with for a pre-evaluation for an IMM Invest loan. Thus, at the time of registration on the imminvest.ro website, your financing chances can be higher.
…MKOR can help you
If your company is in difficulty during this period and you feel that you need this type of financing, the team of consultants from MKOR can support you with:
- initial evaluation diagnostic of the chances to obtain a bank loan within the IMM Invest program;
- assistance in completing documents in relation to the National Credit Guarantee Fund for SMEs (FNGCIMM);
- the relationship with the bank for the loan contracting process, in the case of loan applications accepted by banks.
Methodological specifications
The statistics in this material refer to the first 15,182 companies that registered on the www.imminvest.ro website, on the first day of the program’s opening, until 5:00 PM. We consider that this sample is able to provide us with a representative image for the profile of the companies in the greatest difficulties, due to the COVID-19 crisis.
It is important to know that registering a company on the program’s website does not confer any priority in accessing the money. The company receives the agreement in principle from the National Credit Guarantee Fund for SMEs, if it meets the required eligibility criteria. The real screening will be done by the financing banks, so the applicant companies will finally have to qualify in terms of bankability.
About Cristi Tudorescu
Cristi Tudorescu is an expert consultant within MKOR Consulting and has over 12 years of experience in advising companies and over 16 years in financial markets.
Cristi holds a degree in Finance, Banking, and Insurance from ASE Bucharest and is a Level II graduate of the international CFA (Chartered Financial Analyst) program. He has a background in macroeconomics, sectoral analysis, business valuation, bringing his expertise to structuring financing for companies and in sectoral studies. He holds finance training sessions for entrepreneurs and for brokers in the stock market.
He is involved in two associations, Junior Chamber International Romania – focused on entrepreneurship, development, and civic involvement of young people, and Investors Club – the first investors’ club at the Bucharest Stock Exchange.
At MKOR, Cristi helps model market evolution scenarios for our investor clients. The resulting data, based on the triangulation of primary and secondary data, represents financial models that our clients use in substantiating business plans, for banks and investors, or – simply – to understand the investment opportunity they wish to make.
You can contact him through the MKOR contact form or directly, at cristian [.] tudorescu [@] businessinsights [.] ro, as well as through the BusinessInsights.ro website, where you can find more resources and materials for entrepreneurs.
About IMM Invest
To date, nearly 50,000 financing applications have been submitted in the www.imminvest.ro application. A number of 20,139 requests have already been sent to the 22 partner banks.
The National Credit Guarantee Fund for SMEs (FNGCIMM) announced on Monday, May 4th of this year, that it has already finished processing almost all registration applications for the IMM Invest Romania program registered until May 4th, with a number of 20,139 requests from companies already sent to partner banks to be analyzed for lending.
How are you running your business in these times?
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