5 myths about business financing

In Latvia, many entrepreneurs still treat financing like something dangerous. As if debt itself were the problem. It isn't. The problem is a poorly structured loan.

As usual – the tool isn't to blame. The one who hits their own fingers with it is.

1. "Debt is the enemy"

Debt is a tool. If it's controlled, understood and used for growth, it works for the company. Most of the world's companies don't grow on "their own money" – they grow precisely because they know how to use capital that earns more than it costs.

2. "The bank is the only option"

A bank is just one option. There are 50+ financiers in the market – banks, non-bank lenders, factoring companies, leasing companies, ALTUM, private capital. The bank isn't always the fastest or most profitable route. Often the right solution is a hybrid – part from a bank, part from another financier.

3. "I need huge equity"

Not always. What matters is cashflow, EBITDA, assets and the ability to justify the deal. Business quality often matters more than a pretty bank balance. We've seen companies with small assets receive serious financing because their cash flow and project logic are flawless.

4. "Financing always takes 4–6 months"

If you only go down the classic bank path – maybe. But the right financier can deliver a solution much faster. Non-bank financing is sometimes granted in 3–10 days. Factoring – within 24 hours. The question is choosing the right instrument for the right need.

5. "If financing is expensive, it's better to sell equity"

Not always. Equity is often the most expensive capital, because you're giving up a share of the company's future value. A 10% annual rate on a 5-year loan is usually cheaper than 20% of a company that will be worth 10× more in 7 years.