The absurdity of sharing Invega’s commercial support: didn’t you receive it because you suffered from COVID-19? The | Deal

Algis Pocius, director of the Panevėžys-based company Maisto Namai, which produces and supplies frozen and refrigerated products to public catering establishments, says it has reached a standstill: the company has requested support for the affected business from Invega, but he does not receive it precisely because he has been affected.

Meanwhile, as emphasized by the President of the Lithuanian Hotel and Restaurant Association, Evalda Šiškauskienė, the main reason why only 4% of Invega’s COVID-19 measures have been used so far is that each measure is covered with traps. bureaucratic and excessive requirements. preventing companies from really getting that support.

Too low a credit rating

Maisto Namai, who, according to documents provided by the Records Center, is indirectly owned by Jonas Karos, CEO of Čili Holdings, has a history similar to the thousands of other companies knocked out by the COVID-19 pandemic, with a 95% drop in turnover during the first month of quarantine. and customers remained in debt to the company for more than one hundred thousand euros.

How 15 minutes For this reason, almost four weeks ago, the company asked Invega for a loan payable as soon as possible for a business in such a situation.

“This measure would help us obtain the money that our clients owe us. We sold the product but did not receive the money. It is under this Invega ASAP program that we are eligible: we are at least 50% of the small and medium-sized companies affected by COVID-19. employees, the financial report for 2019 has been presented, ”said the boss.

However, after a while, Invega replied that the request was rejected because GOscore’s rating is too low. And one of the criteria for getting a loan payable as soon as possible is an average or higher credit rating.

The GOscore rating, which predicts the likelihood of a natural and legal person filing for bankruptcy or default, is calculated using data analysis and forecasting technology company Scorify. Corporate credit ratings are also compiled by more companies in Lithuania.

I learned to attribute to the affected sector

After explaining why the company’s credit rating is too low and what it is used for, A. Pocius learned from Scorify representatives that Food House’s credit risk assessment was influenced by several factors, including the sector. risky business, changes in the number of employees, as well as negative information covering a wide range of arrears.

A.Pocius objects that there are no arrests of debts and property, that no legal proceedings are being carried out, so that such response surprised him greatly. However, according to information from Rekvizitai.lt, Maisto Namai has had debts with Sodra.

However, the manager was particularly outraged that the company’s credit rating could also deteriorate because it was classified as a sector that was considered risky.

We are a food company. How can this be assessed as a risk sector? Maybe there should be a policy, government-defined criteria for what that risky business is. 2019 was very good, profitable, – said A. Pocius.

“We are a food company. How can this be assessed as a risk sector? Maybe there should be a policy, government-defined criteria for what that risky business is. The company was founded in 2008 just before the financial crisis: it survived. 2019 was very good, profitable, that growth was quite high, a considerable amount was invested in equipment earlier this year. So after such an automatic response, we felt unnecessary to the state, ”the manager made no secret of his disappointment.

He was outraged that the company had repeatedly reached out to the credit rating company to review excerpts from various records certifying that the company was healthy, but only received stamped responses.

We are not asking for any kind of support; in fact, it is a low-interest loan with a guarantee from the states, which we will pay in any case. It doesn’t seem like we want anything from the state, – A.Pocius wailed.

“It is quite strange, because we are not asking for any type of support, in fact, it is a low-interest loan with a guarantee from the states, which we will pay in any case.” It doesn’t seem like we want something out of state. For a company to exist, funds are needed if you do not receive funds for the products sold, because the buyer is closed and does not have the funds, how can it exist? “Asked the interlocutor.

He argued that the company initially did not request aid from the State, but had to request aid when it was no longer generating income and the accounts were being emptied intensively.

“We were optimistic at first, it was nice to see that support provided.” And when you hit your head against the wall, optimism diminishes. We went everywhere we could pay attention: a healthy, profitable business on December 31. excellent financial report, bright and vague outlook – assessment that we are a risky business. So, I would like to know what is a risk free business? The manager asked.

If Maisto Namai’s low credit rating was due to belonging to the affected sector or other reasons, the company Scorify, which calculated the credit rating, 15 minutes He did not give further details arguing with the data protection law.

Žilvinas Milerius, Director of Scorify 15 minutes alleged that the ratings are based on a globally accepted methodology based on the historical information of the company and a series of criteria, including the activity sector of the company, employee trends, average salary data, financial information , the credit history, the relations of the company and its administration with other companies, whose solvency also affects the general evaluation.

Rating deteriorates even after being listed on ITS

More companies face a similar situation in which Food House finds itself. 15 minutes Entrepreneurs and business association chiefs interviewed argued that corporate credit ratings could deteriorate not only because the company belonged to a sector affected by the pandemic, but also because it was included in the STI’s list of taxpayers affected by COVID-19.

Juozas Tubinas, the manager of the company that manages four hotels, was convinced of that. How 15 minutes J.Tubinas claimed that as soon as it was included in the ITS list, the company’s credit rating changed from medium to high risk.

“The risk has increased considerably, which is severely deteriorating the relationship with the bank to obtain funds. Also, one of the criteria for obtaining an Invega loan for accounts payable as soon as possible is that the credit rating must be average or better , reason why many of the companies that I know are rejected due to this lowered rating ”, reveals J. Tubin.

One of the criteria for getting an Invega accounts payable loan as soon as possible is that the rating should be average or better, which is why many of the companies I know are rejected because of this downgraded rating, Tubin said.

Mr. Tubin did not request the last measure, and was able to obtain a liquidity loan from Invega a second time: the request was rejected the first time, but the businessman demonstrated that it was made without merit. It is true that Tubin International’s rating has improved again, but the businessman says he does not know what caused it.

40 companies left

Currently, the STI has 55,000 on the list of affected taxpayers. companies. Only companies on this list can apply for part of the state support: defer payment of taxes until two months after the end of the emergency, request part of the Invega measures, and companies with up to 9 employees receive a non-refundable subsidy, the amount of which depends on 2019 payments. Personal income taxes.

On the other hand, some companies claim that the potential benefits of being on the ITS list are outweighed by the damage caused by a downgraded credit rating. For this reason, some companies leave this list. According to the STI, 40 companies requested to be removed from the list.

One of those companies is Serfas, a company that sells wholesale and sells structural construction materials.

Director of the company Saulius Valunta 15 minutes He alleged that Lithuanian and international companies that grant trade credits to companies that have been included in the ITS list of affected companies automatically lower their credit ratings. This reduces access to credit for both banks and supply companies.

We don’t see the advantages of being on that list: taxes still have to be paid, that list does not bring any tangible benefits to our sector. The state’s declared support for the affected companies is only theoretical, argued S. Valunta.

“With the decrease in bank funds, we have to invest more in goods and raw materials. This is a direct loss. Once removed from this list, the rating is revised again and improves, but not as fast. We do not see any Advantage of being on that list: Taxes have yet to be paid, and that list brings no tangible benefit to our commercial manufacturing sector. State declared support for affected companies is only theoretical. In practice, it is either impossible or extremely complicated to use, which makes this theoretical support meaningless ”, S. Valunta argued why it was removed from the list of ITS.

As soon as he learned that his company had been automatically included in the list of companies affected by COVID-19 by the STI, Arnoldas Služmanas, director of the business consulting firm Praemonitus, immediately wrote a request to remove it.

“First of all, I don’t think my business has been hit hard, there are many more areas that need more help.” Second, in my subjective opinion, being on the list doesn’t do any good, but I suspected it might hurt. I have heard that some credit institutions consider the presence of credit on that list to be a risk factor. ” 15 minutes commented the director of the company A.Služmanas.

He said he had seen complaints on social media that the company had not received state aid because it was on that ITS list.

Such a stupid curiosity has arisen that you find yourself on the list of affected companies, but you don’t get help because you’re on that list. Here is the same if you go to the doctor for help because you are injured and would not give it to you because you are injured. This is absurd, A.Služmanas was surprised.

“It’s such a stupid curiosity to be on the list of affected companies, but you don’t get help because you’re on that list.” Here is the same if you go to the doctor for help because you are injured and would not give it to you because you are injured. This is absurd, “asked A. Služmanas.

Deterioration by 48 percent. corporate credit rating

Three 15 minutes talk The companies’ credit rating agencies recognized that the company’s credit rating could be impaired both by the fact that the company belongs to the sector affected by the pandemic and by the inclusion in ITS of the list of taxpayers affected by COVID-19. .

Rasos Ruseckaitė, Head of Credit Evaluation Creditinfo 15 minutes reported that Creditinfo’s bankruptcy and late payments ratings respond to current events, as well as public information about companies that may affect their creditworthiness. So on March 20. After the publication by STI of the list of companies affected by COVID-19, there have been changes in the ratings of these companies.

The information published by the STI about companies whose activities will be negatively affected by COVID-19 is an important and reliable source of data to which we must respond, R. Ruseckaitė is not hiding.

“Circumstances in the economy have changed significantly, and prospects for Lithuania’s economic growth are negative today. Naturally, this change inevitably affects the ratings of companies as well. Our goal is to assess growing credit risk in the fastest and most possible objective and reflect this in the ratings. The information published by the STI on companies whose activities will be negatively affected by COVID-19 is an important and reliable source of data to which we must respond “, R. Ruseckaitė does not hide.

The Head of Credit Risk Assessment at Creditinfo adds that changes in consumer habits and declining demand in certain sectors will have a negative long-term impact on companies’ financial situation, liquidity and cash flow. , even after the end of quarantine.

“The ITS has included the most vulnerable companies in COVID-19, so it will be difficult and slow for some companies to restore demand to the pre-quarantine level,” says R. Ruseckaitė, noting that over time and other variables do not have deteriorated, The impact of negative information will decrease.

J.Milerius also acknowledged that listing on the ITS is considered a negative factor, although he emphasized that this fact alone will not have a significant impact on the company’s credit rating.

Inclusion on the ITS list only slightly changes the company’s risk assessment, but if the company begins to lay off employees, debts arise, payments to partners are significantly delayed, then the company’s rating deteriorates, Milerius explained. .

“Inclusion on the ITS list only slightly changes the company’s risk assessment, but if the company begins to lay off employees, debts arise, partner payments are significantly delayed, then the company’s rating deteriorates,” Milerius explained.

According to him, compared to March 13, today 48 percent. corporate ratings have deteriorated in at least one class, and about 7 percent. – improved.

Miler also noted that not all had deteriorated; for example, companies that had adopted alternative business models and continued to operate and through quarantine could have avoided this trend. However, the head of Scorify did not agree to provide data on the rating participation of the companies listed in the STI.

That the ratings of some companies were deteriorated by both the affected industries and the ITS list 15 minutes Saulius Žilinskas, the director of Creditreform, also confirmed.

“Globally, there have been two adjustments to corporate credit ratings, one by industry: whether they have been suspended by the state or because they are tied to the industries directly affected. Second, all local state decisions. There are two lists on Lithuania: one is the list of ITS, in which 32 thousand were included in the initial stage, companies, and the second, in which the companies themselves request to be included “, – commented S.Žilinskas and added that the desire of the Being listed on the ITS company declares certain problems.

Advises to adjust the criteria.

The managers of the credit rating companies emphasize that their evaluations simply reflect reality, and Invega itself includes the requirement to have a medium or higher credit rating when assigning one or another criterion.

“The ITS list was compiled by the state, the criteria for receiving support were compiled by the state. I see two problems in the state: a misunderstanding that time is the most important factor and a lack of trust in business, which adds a huge bureaucratic burden to support schemes. Those support measures that were supposed to get into the business didn’t come very negligently. If we look at the decisions of other countries, a subsidy or a loan is quickly granted to a company without significant restrictions, knowing in advance that 10%. The funds will not be returned. Because the support is probably not the resuscitation of the corpses, ”S. Žilinskas sees too many excessive demands.

Ž. Milerius also agrees with him, emphasizing that the methodology of state support programs is determined, therefore, the providers of that support – Invega and the Ministry of Economy and Innovation – can adjust it.

“The rating is only one of the criteria by which these institutions provide support. Therefore, these institutions can, if necessary, change, release or restrict the support criteria,” Milerius emphasized.

Admittedly, J. Milerius hinted that Scorify is thinking in detail about the impact of COVID-19 on individual sectors.

The credit rating rejects 9%. Applications

Unlike entrepreneurs, Invega sees no contradiction that companies that want to apply for a state support measure should be on the ITS list, but once they find it, they can close the door on another.

Kęstutis Motiejūnas, CEO of Invega 15 minutes He affirmed that due to a credit rating that was too low, 8.86 percent was rejected. applications, and a medium and high level credit claim protection is established to guarantee that companies can pay the loan. For this reason, there are no plans to abandon this criterion.

“The ASAP loan service is intended for provider companies that have not been liquidated by their company’s customers precisely because they have been affected by COVID-19. The measure aims to help sustainable pre-quarantine companies. Therefore, It is important that the companies that receive loans are able to maintain businesses, jobs and pay the loan, and the credit rating shows the probability that the borrower will fail in the next 12 months, i. his possibilities of financial liquidation, “emphasized K. Motiejūnas.

This argument by Invega is also supported by businessman J. Tubin, who believes that the credit rating is a good safeguard in the distribution of aid, because “otherwise it is possible to spill public money on the companies that fail.”

However, the president of the Lithuanian Hotel and Restaurant Association, E.Šiškauskienė, summarizes that endless safeguards and burdens are included in every business support measure. As a result, that support doesn’t go into business.

“Whatever action you take, it is fraught with several problems: it is not suitable for the company, because the ratings have deteriorated, it is treated as a struggling business, it is considered related companies. For example, you may not receive a rental subsidy if two of your businesses are doing well and a third is doing poorly. And the circle becomes endless. It is very sad: both invented bureaucratic traps and all kinds of requirements. There is a feeling that they were created to let no one use that support, ”regretted E. Šiškauskienė, adding that state support from the members of the association has so far only reached a very small part of the companies.

And whether the wicks are redundant or not is better revealed by the statistics. Two months after the quarantine started, only 10% has been distributed so far. 50 million for loans payable as soon as possible.