Frequently asked questions
Regarding co-financing with Capitalia
Since 2007 Capitalia funds small and medium enterprises in Latvia, Lithuania and Estonia. Our financing is used by companies in situation when bank debt is not sufficient or available. With bonds represented in NASDAQ Baltic, we offer investors transparent, safe and ethical way how to invest in the Baltic businesses. To date Capitalia has financed working capital and investment needs of more than 1000 companies providing over EUR 30 million in growth of these businesses.
Every month Capitalia evaluates over 250 applications for financing from businesses in the Baltic States. Through our rigorous evaluation process, we finance around 10% of those applicants. With every case we finance we aim to attract passive co-investors that would like to invest with companies along with us. This allows us to keep our own balance sheet “lighter” but also gives investors opportunity to participate directly in financing of the small and medium sized businesses in the Baltic States.
Co-financing is different from crowdfunding because of a very important characteristic. A typical crowdfunding platform is just and advertisement board that offers investors list of investment options. We at Capitalia offer to investors only cases and only at terms that we ourselves believe offer good risk/return relationship. In all cases Capitalia will invest its own capital in the amount of 5-10% of the total project.
Every new investment opportunity will be notified to the investor by email. All available investment possibilities are also always visible at our platform.
When you have chosen company in which you would like to invest and indicated the desired investment account, an invoice will be generated for the transfer of the investment. You should transfer the investment amount to this account within 48 hours. Reception of investment will be individually validated and if necessary we may have to ask for additional documentation to implement European "know your client" and AML regulations. Once all of the required investment amount has been gathered, loan agreement with the client will be signed and investors will be notified that the financing has been issued to the final recipient. Along with the notification, an investment confirmation as well as copy of the signed loan agreement will be provided to the investor.
We accept investments only in EUR currency.
The minimum investment in each project is EUR 1,000 and there is no maximum limit that a single investor can invest in a project.
The interest income earned though Capitalia platform is taxed for each investor based on legislation of the respective country where the investor is a tax resident. We will make all payments to investors at gross value without deducting any income tax. Hence, investors should seek independent tax advice on their tax returns. We can provide guidance and advice to the extent of our experience.
Investments made with Capitalia can be exited before their maturity by selling them to other interested investors. Investors can also approach Capitalia at email@example.com to seek exit from the investment. We may but would not be obliged to purchase such investment from the interested party. In such situations a fee of 4% from the remaining investment principal shall be applied.
Regarding repayment of investments
For co-financing investments we hold in a separate dedicated account in a bank. Whenever we will receive from the company any payment in respect to the investment, we will make bank transfer within 2 working days to the bank account of the investor. So there are no virtual accounts to check and manage, all income will be directed straight towards your bank.
Any late payment situation will be managed by Capitalia in line with its established recovery and late loan situation procedures. Capitalia will also bear any collection costs, which would be reimbursed from the first income received in the collection process. In some situations, we may also agree on a restructuring schedule with the client. Only one rescheduling can be done for a loan.
Regarding investment protection
Each investment in the company is structured as a loan. Investors assign Capitalia to act as their representative to manage the loan. The loan is owned jointly by all investors (including Capitalia) that have subscribed to this investment. Any additional security measure for the loan (including personal guarantees) are kept by Capitalia that will act as collateral agent for each of the investment case.
In an unlikely case that Capitalia defaults, the recipient of the loan is obliged through contract to continue servicing the loan by paying directly to each investor.
Regarding fees for investors
Capitalia charges no fees from the investors, unless otherwise explicitly noted under each investment description. Companies that seek financing are charged 2-5% structuring fee from the raised investment amount as well as regular monitoring/ management fees associated with supervision and costs of maintaining the investments.
Investors bear no costs when investing with Capitalia platform. However, in case of international transfers outside of EU, we will deduct associated transfer fees from the payable amount to the investor.