Business loans in Kosovo: how to get one

Most businesses in Kosovo are funded with the owners' savings and money from family. But when a business grows, needs equipment or runs short of cash between a sale and payment, a bank loan becomes unavoidable. Here's how to improve your chances of getting one on good terms.

Types of business loan#

Type	What for	Usual term
Working capital loan	Stock, wages, covering the gap until payment	Up to 1 to 2 years
Credit line or overdraft	Temporary cash needs	Renewable
Investment loan	Equipment, machinery, vehicles, renovation	3 to 7 years
Property loan	Buying or building premises	10 years or more
Leasing	Vehicles and equipment	3 to 5 years

Banks or microfinance?#

• Banks have lower interest and larger amounts, but ask for more documents and history.
• Microfinance institutions give smaller loans, faster and with less collateral, but usually at higher interest. They're often the first option for farmers and very small businesses.

Always compare the effective interest rate, not just the nominal rate. Approval fees and mandatory insurance raise the cost.

The Kosovo Credit Guarantee Fund (KCGF)#

The biggest obstacle for small businesses is collateral: the bank wants property as security that many entrepreneurs don't have. The KCGF partly solves this by guaranteeing part of the loan at partner banks. The bank then asks for less collateral from you.

You don't apply to the KCGF directly. You apply at a bank and ask whether your loan can be included in the guarantee scheme. There are also special windows, for example for agriculture, women entrepreneurs or new businesses, which change from time to time.

Documents usually required#

For the business:

• the ARBK registration certificate;
• financial statements or tax returns for the last 1 to 3 years (see Financial statements);
• bank statements for 6 to 12 months;
• contracts with major customers;
• a business plan for new businesses or large investments (see Business plan).

For the owners:

• ID documents;
• collateral documents, such as a property certificate;
• sometimes a personal guarantee.

What the bank checks#

1. Credit history of the business and owners in the Central Bank's Credit Registry.
2. Cash flow: whether monthly income covers the instalment.
3. Official records: ARBK status, owners, authorised persons. Banks check these against the documents you submit. On Kerko you can see how your business looks to a third party.
4. Tax debts: a debt to ATK often blocks a loan.

Mistakes that get applications refused#

• Undeclared turnover. If sales don't go through the bank and aren't declared, the bank can't see them.
• A private account mixed with the business one. See The business bank account.
• Outdated ARBK records. An address or director that changed but wasn't registered slows things down. See Changing business details in ARBK.
• A request with no clear purpose. "We need money" isn't enough; say what for and how it will be repaid.

Before you sign#

• Calculate the instalment under the worst sales scenario.
• Read the terms for early repayment and late payment.
• Don't use a short-term loan for a long-term investment.

If a loan isn't the right fit, see Grants and subsidies for businesses.