After two years of stagnation, Lithuania’s economy showed resilience in 2024, with GDP growth of 2.7%. This economic recovery was broad-based, with value added increasing across many economic activities. As debt-servicing costs declined amid falling interest rates, financial liabilities of businesses increased rapidly; however, due to strong growth in financial assets, net financial assets of Lithuanian Non Financial Corporations (NFCs) rose.
SMEs account for 99.6% of all enterprises operating in Lithuania, the majority of them (86.8%) being micro-enterprises. Most SMEs are primarily engaged in wholesale or retail trade activities (more than one-fourth of all SMEs). SMEs account for around 68% of total employment, while their share of gross value-added is close to 54%.
Driven by rising demand for loans amid decreasing interest rates, NFCs borrowing in Lithuania began gaining momentum in 2024, with banks expecting a further increase in demand for corporate loans. The loan portfolio of firms grew at an annual rate of 19.5% at the end of the second quarter of 2025, driven by lending to real estate and manufacturing companies and accompanied by a recovery in lending to the transport sector. Business indebtedness increased slightly from the low reached in 2023, but the MFI credit-to-GDP ratio remained one of the lowest in the Euro Area. The number of companies with loans from credit institutions remained largely unchanged, as companies continue to face structural difficulties when seeking to borrow from credit institutions. As a result, internal resources remain their main source of funding.
The Bank Lending Survey of Lietuvos bankas indicates that although the share of rejected or partially granted corporate loan applications increased slightly in the first half of 2025, the same period recorded the first overall easing of lending standards in more than three years, albeit modest. Overall, banks currently view the financial situation of companies as stable or improving.
In 2024, companies increased their short-term financing mainly through accounts payable and trade credits, while their long-term financing needs were met by increased MFI lending and loans from other NFCs. Companies are increasingly turning to alternative sources of financing, the range and demand for which have expanded in recent years, with bond issuance and crowdfunding platforms playing a more prominent role. For example, in 2024, Lithuanian NFCs raised nearly EUR 460 million through bond issuance and EUR 280 million through crowdfunding platforms. This amount accounted for nearly 21% of the financing provided by credit institutions to companies.
The government supports SMEs by ensuring favourable conditions for obtaining the financing needed to start and develop their businesses. When a company does not have sufficient collateral, it can apply to the national development bank ILTE (formerly INVEGA), which provides various options, including loan guarantees, factoring, leasing, and export credit guarantees. ILTE also offers preferential loans through alternative financing instruments, including crowdfunding, as well as loans at preferential rates via venture capital–related funding schemes. In addition, municipalities provide various support schemes for SMEs; for example, when starting a business, entrepreneurs can receive support to cover set-up costs, part of interest payments, and other expenses. To mitigate the impact of the crisis caused by Russia’s large-scale aggression against Ukraine, direct loans to business entities affected by the war have been introduced.