Romanian entrepreneurs are preparing for a financial crisis by choosing credits, but what credit option represents the best option for them?
A recent study by Claret Credit analyzed why Romanians chose to apply for loans and what credit options Romanian entrepreneurs chose in anticipation of a possible crisis.
Suppose the anticipated crisis is like locking the door for some business owners. In that case, others see it as an opportunity and are looking for financing options now to get through the rather challenging phase that is likely to come next. Some business owners choose bank loans. But what should you do if you already have a loan, or if the bank where you opened the account has restrictions on credit that prevent you from getting one?
The study was conducted on 3,200 financing requests by Romanians over the summer. Cities like Bucharest, Cluj, and Iasi receive the most applications from Romanians, followed by Ploiesti, Timisoara, and Brasov. Constanta and Craiova come in last regarding the number of requests for non-bank loans among significant cities.
Based on the data, the following conclusions can be drawn about how and why Romanians borrow in advance of a financial crisis:
The types of credit that most Romanians apply for are:
- Loan for personal needs with a real estate guarantee of 31%
- Loan for legal entities with a real estate guarantee of 12%
- Credit for real estate projects 27%
- Credit for businesses in HoReCa 10% (hospitality industry)
- Entrepreneur Loan 11%
- Mortgage Loan 9%
Age of applicants – most applicants are between 35-44 years old:
- 18-24: 13.93%
- 25-34: 19.59%
- 35-44: 25.19%
- 45-54: 23.85%
- 55-64: 9.55%
- over 65: 7.88%
Amounts requested – a quarter of applicants request more than EUR 20,000:
- 40% applies for amounts up to EUR 10,000
- 35% applies for amounts up to EUR 20,000
- 25% applies for amounts over EUR 20,000
According to the study, in Romania, Claret Credit issued loans totalling more than EUR 15 million by the end of 2021, with the most significant credit amount being EUR 3,000,000.
How Romanians apply for non-bank loans:
- 72% of Romanians use online
- 15% of Romanians go directly to the headquarters of the non-banking institution
- 7% apply by phone
- 6% apply through financial intermediation companies
Loan granting period:
- 85% of the loans granted were approved in 5 working days
- 15% of loans received approval up to 10 working days, depending on the complexity of the applicant’s situation
What type of interest rate do Romanians prefer:
- 90% prefer a fixed interest rate throughout the duration of the contract, while only 10% want a variable interest
Why do real estate developers borrow during this period:
- 63% of developers borrow to start a new real estate development project
- 37% is borrowed for the completion of the already started construction
The nature of the constructions for which real estate developers borrow:
- 70% of the developers who accessed a non-bank loan build residential blocks, and 30% complexes of individual houses
About Claret Credit
Claret Credit is a non-banking financial institution operating in Romania. Claret’s vision is to be a leader in the financial institutions market in Romania, the only institution of its kind that offers “all in one” financial solutions for the private sector, based on constant innovation, professionalism and team involvement.