Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.
Factsheet for measure LV-2020-13/663 – Updated – measures in Latvia
|Country||Latvia , applies nationwide|
|Time period||Temporary, 25 March 2020 – 30 June 2022|
|Type||Legislations or other statutory regulations|
Supporting businesses to stay afloat
– Access to finance
|Author||Kriss Karnitis (EPC) and Eurofound|
|Measure added||16 April 2020 (updated 07 October 2022)|
In cooperation with the Ministry of Economics state owned development finance institution ALTUM has prepared assistance measures for companies affected by crisis due to spread of COVID-19 epidemic.
Working capital loan is liquidity support for businesses, farmers and those in the fisheries industry, intended to help companies whose activities have been affected by COVID-19. ALTUM is a state-owned development finance institution, which offers state aid for various target groups with the help of financial tools (such as loans, credit guarantees, investing in venture capital funds, etc.). ALTUM develops and implements state aid programmes to compensate for the market's shortcomings that can't be solved by private financial institutions. The law “On Measures for the Prevention and Suppression of Threat to the State and Its Consequences Due to the Spread of COVID-19” (adopted on 20 March 2020, valid from 22 March 2020) and Regulations of Cabinet Nr. 122 Regarding the Increase of the Reserve Capital provides funding for the measure.
Amount of the available loan is up to €1 million, but the total loan does not exceed at least one of the criteria:
Term of the loan is 1-3 years. The loan holidays is available up to 12 month. Reduced interest rate and reduced collateral requirements are applied for these loans.
There are also several requirements for eligibility. The loan can not be applied to refinance other loans (principal payments, debt repayments of related companies, debt payments incurred before March 2020, dividend payments, etc.). Negative impact of COVID-19 on business activities has to be justified. If the company was already in financial distress as of December 31, 2019 the loan will not be granted. Companies operating in the gambling, financial brokerage, firearms, tobacco, alcohol, real estate sectors are not eligible.
In the period from 25 March 2020 to 10 June 2020 a total of 342 companies have received working capital loans for the total amount of €69 million, most of them small (39%) and micro (41%) companies, 17% loans to medium-sized companies and 3% to large companies.
The most demanded is financing up to €100,000 for one transaction, which was received by 68% of ALTUM customers, of which the smallest loan in the amount of €1,840 was received by a trading company from Riga. 10% of entrepreneurs have borrowed financing from €101,000 to €200,000 during the crisis, 14% from €201,000 to €999,000, while 9% of companies have received the maximum loan amount of €1 million.
Working capital loans are most actively used by companies operating in the service sector (31%), manufacturing (24%) and trade companies (24%), as well as transport (9%), construction (7%) and agriculture (3%). Loans to support operations during the virus crisis are used by companies all over Latvia - most of the financed companies are located in Riga and Pieriga (65%), Latgale (12%), Kurzeme (10%), Vidzeme (7%) and Zemgale (6%).
|Does not apply to workers||Applies to all businesses||Does not apply to citizens|
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Form||Not applicable||Not applicable|
Social partners' role in the implementation, monitoring and assessment phase:
Top level social partner organisations – the Latvian Employers’ confederation and the Free Trade Union Confederation of Latvia – on 17 March 2020 has published “Statement on support for government action to limit the spread of the COVID-19 and to reduce the impact of the crisis on Latvian companies and workers”. The social partners emphasized the need for cooperation of government, businesses, workers and citizens to ensure that every measure taken helps to address this crisis.
As far as we know, social partners participate in discussions on measures for the prevention and suppression the spread of COVID-19 and on crisis impact on economy. However specific opinions of social partners are not published.
Eurofound (2020), ALTUM Working capital loan, measure LV-2020-13/663 (measures in Latvia), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/LV-2020-13_663.html
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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.