Lithuania is soon to become the first country in the world to regulate lending between enterprises and their customers.
“There are many countries which have similar borrowing alternatives, but they do not have regulation. We will be the only ones who will legitimize it,” said Tomas Lukošaitis, peer lending platform Savy marketing projects manager.
Foreign natural and legal persons will also be able to borrow, but Lukošaitis adds that priority will be given to Lithuanian companies and foreign companies that want to operate in Lithuania.
“The point is that today the segment of enterprises to which the peer lending platforms are oriented, hardly ever get bank loans,” said Lukošaitis.
Stasys Kropas, the president of Association of Lithuanian Banks, supports the legislation. He believes that banks will not lose customers.
“Banks will always be borrowing for cheaper and the best companies will always receive the best deals from banks. Competition is fierce, and our margins are the lowest in Europe. If a company or individual cannot borrow at the bank, it means there is an increased risk. Perhaps there will be some in the market who will be willing to take on the increased risks. They will need to pay a little more for the risk than at the bank. In this way they can develop their business, and then come to the bank to borrow because it is cheaper there,” said Kropas.
“There are almost no additional ways to lend in Lithuania without banks. The greater the diversification, the greater the access, the more business will be active, it is also better for the banks,” he said.
Lithuanian Free Market Institute expert Dominykas Šumskis said that currently there are over 7,000 individuals interested in this form of investment and are waiting for the approval of the law.