In 2023, Estonian SMEs employed 83% of the workforce and accounted for 79% of total value added. Micro-enterprises, defined as firms with fewer than 10 employees, made up 95% of all enterprises, employing 41% of the workforce and contributing 31% of the total value added.
SME interest rates rose from 4.08% in 2022 to 6.76% in 2023 and 6.92% in 2024, which in part explains a relatively modest demand for credit. Interest rates for large firms peaked at 6.49% in 2023, declining to 6.03% in 2024. The interest rate spread between SMEs and large firms widened to 0.9 percentage points in 2024, tripling compared to the previous year.
Despite the increase in SME interest rates, new SME lending reached EUR 2.46 billion in 2024, up EUR 67 million from the previous year. This increase ended a two-year decline. Nevertheless, SMEs accounted for only 23% of the total new business lending, a figure that has steadily fallen since 2019.
In 2024, outstanding business loans to Estonian SMEs totaled EUR 1.79 billion, continuing a gradual upward trend that began in 2019. However, the SME share of total outstanding loans declined to 17.1%, extending a downward trajectory observed since 2021.
Venture and growth capital rose steadily until peaking at EUR 1.35 billion in 2022 but has since declined significantly – falling to EUR 451.6 million in 2023 (a 67.4% decrease) and to EUR 332.8 million in 2024 (a further 26.3% decrease year-on-year). The decline in venture and growth capital has coincided with the rise of interest rates and geopolitical uncertainty.
Leasing and hire purchase turnover remained relatively stable, fluctuating within a ± EUR 50 million range over the past seven years, except for the 2020 COVID-era. It may indicate that consumer demand is consistent; however, growth might be constrained by lending conditions. Leasing and hire purchases increased by EUR 7 million in 2024 compared to 2023, reaching a total of EUR 769 million.