While the business loan portfolio has grown at a record pace in recent years and lending standards have eased, a large portion of Small and Medium-sized Enterprises (SMEs) still find it difficult to secure financing. A representative from SME Bank – Lithuania’s first digital bank for SMEs – notes that in 2026, rising labor costs and geopolitical uncertainty may further strain credit availability. However, solutions remain available.

Official data shows that the business credit market has experienced a major upswing. According to the ILTE financial market review, the total lending portfolio for non-financial corporations reached €13.3 billion by mid-last year – a 19% increase (€2.2 billion) compared to the same period in 2024. This growth significantly outpaced the rest of the Eurozone, where the annual change in credit volumes was only 2–3%.

The SME lending portfolio has also seen substantial expansion. Marius Bačianskas, Head of Lending at SME Bank, estimates that based on unaudited data, the bank’s own portfolio grew by 81% in 2025, reaching €147 million.

“The average commercial loan amount was €360,000, and corporate lending in Lithuania accounts for 97% of our total portfolio value. Furthermore, the volume of deposits held at SME Bank grew 2.5 times to €426 million,” notes the representative of the bank, which operates across the Baltics, the Netherlands, and Finland.

Large commercial banks maintain a cautious stance

According to M. Bačianskas, the rapid growth in borrowing activity is linked to economic recovery, but the higher risk profiles associated with SMEs remain a hurdle. These risks often deter major commercial banks, despite the slight loosening of credit conditions observed last year.

“Some sectors lack tangible collateral, while others, such as hospitality and tourism, are highly sensitive to economic cycles. SMEs typically require working capital for equipment, expansion, wages, and taxes. Although the credit risk is higher, we see the greatest growth potential in this segment,” says the Head of Lending at SME Bank.

Last year, for example, SME Bank issued the highest volume of new credit to the service sector (€23.5 million) – specifically travel, accommodation, and catering. Wholesale trade followed in second place.

“The wholesale sector carries specific risks: low margins and high sensitivity to geopolitical shifts. This means even a minor strategic error can lead to significant losses. Moreover, these firms often lack hard collateral and face constant liquidity gaps,” explains Bačianskas.

Success depends on financial hygiene

Experts forecast that credit access this year will remain consistent with last year. SME financing has become more accessible due to supplemental instruments. For instance, SME Bank utilizes EIF (European Investment Fund) programs to provide loans for modernization, efficiency, and ESG (Environmental, Social, and Governance) compliance. However, new variables are emerging.

“This year, borrowing capacity will be heavily influenced by the broader European economy and domestic consumption. With labor costs rising rapidly in Lithuania, corporate profitability may decline, making it harder for firms to meet debt serviceability requirements,” the interviewee predicts.

Often, businesses face credit rejection due to their own internal management. Bačianskas observes that a primary issue is a lack of financial hygiene.

“For any company seeking debt financing, transparent financial reporting is mandatory. This is a core requirement during the underwriting process. It is critical that management understands key financial ratios and maintains a clear strategy. Market liquidity is available for businesses of all sizes, but they must complete their ‘homework’ first,” advises the SME Bank Head of Lending.