Refinancing in Latvia: are you overpaying for your business loan?

Introduction

An interesting situation is unfolding in Latvia – refinancing is becoming increasingly relevant, yet entrepreneurs still use it far too rarely.

For individuals, refinancing has already become simpler (no additional fees), but for businesses, the market still operates on old principles – with a 1–2% early repayment commission.

And this is exactly where the opportunity lies. Even with this commission, refinancing can be financially very profitable in many cases.

What's happening in the refinancing market?

Banks and alternative lenders have changed their approach in recent years:

• Lower interest rates available for good companies
• Increased competition among lenders
• More flexible terms (duration, schedule, structure)

At the same time, many entrepreneurs continue paying old loans under old conditions.

The result – overpaying thousands per year.

Is refinancing actually profitable?

Let's look at a simple example:

• Loan: €100,000
• Current rate: 15% per year
• New rate: 9% per year
• Refinancing fee: 2% (€2,000)

Result:

• Annual savings: ~€6,000
• Break-even: ~4 months

This means after 4 months you're already in profit.

When should you definitely consider refinancing?

• After submitting your annual report – the best time to talk to banks
• If paying above ~10–12% annually
• If your business has grown (revenue, profit, stability)
• If your current lender isn't offering improvements
• If you want to reduce monthly payments or increase financing

3 main refinancing strategies

1. Bank → Bank (better terms)

Same collateral, but:

• Lower rate
• Larger loan

2. Cash flow optimization

• Longer term
• Smaller monthly payment
• Less pressure on cash flow

3. Business upgrade

If your company has grown:

• You may qualify for bank financing
• You can replace expensive financing with cheaper options

The biggest mistake

Entrepreneurs treat a loan as a static thing.

In reality, it's a tool that needs regular optimization.

What to do next?

If you currently have an active loan, it's worth checking:

• Whether you're overpaying
• Whether you can improve terms
• Whether you can obtain additional financing

Check your situation in 2 minutes: Open the refinancing calculator →

About Oferta Finance

Oferta Finance helps businesses secure financing from 40+ financial institutions across Europe.