Why are the smartest Baltic companies no longer just calling their banks?

Author: Jurate Eideniene, Project Partner & CFO

Years ago, when I started as a corporate credit analyst at Swedbank Lietuvoje, the funding roadmap for a growing Baltic mid-market company was straightforward: you went to your local bank. If the numbers fit banks’ internal risk frameworks, you got the loan.

Today, that playbook is fundamentally shifting with high growth in private credit.

And Lithuania hasn’t fully felt it yet – but it will.

Here’s what I’m seeing worldwide and across Europe: banks are quietly stepping back from lending to mid-sized companies.

As noted by the Briefing to European Parliament (May 2026), private credit, whose modern development began in the 1980s, has emerged as a key source of financing and lending solution for middle-market companies which are considered too risky or large for commercial banks, yet too small to access public markets.

Private credit has expanded rapidly since the global financial crisis, gaining market share from both bank lending and public markets, therefore emerging as a significant asset class and an increasingly interconnected component of the financial system. Tighter bank regulations after the 2008 Global Financial Crisis (GFC) and Basel III capital requirements constrained banks’ balance sheet and reduced bank’s capacity to lend.

The result? A structural funding gap that private credit funds are rushing to fill.

It is estimated that out of the $2.3 trillion global private credit market, Europe accounts for approximately $400 -530 billion, and is expected to reach $940 billion by 2030 (Carlyle). In Europe reform and innovation are fueling expansion. In Southern Europe, regulatory and legal adaptation is transforming markets previously seen as too complex for many lenders. In Italy the widespread adoption of Luxembourg-based vehicles has reshaped the market’s accessibility and appeal. Spain has followed a similar trajectory as banks retrench, opening space for alternative lenders to finance family and founder owned companies.

Now look at Lithuania.

Three banks control nearly 80% of all banking assets – one of the highest concentration rates in Europe. Business credit-to-GDP ratios remain low. Corporate loan margins are among the highest in the EU, at around 110 basis points larger than EU average. That’s not a competitive lending market. It’s a bottleneck.

For a Lithuanian or Baltic company planning an acquisition, a management buyout, or cross-border expansion, the options have been limited: go to one of the same three banks, or don’t grow.

That’s starting to change. Driven by joint institutional backing like the European Investment Fund (EIF) and ILTE, and emergence of first local private credit funds, non-bank direct lending is no longer a niche „last resort”– has matured into a mainstream tool for strategic growth.

Having sat on bank credit committees, worked on private equity transactions earlier in my career, and now advising growing businesses as a fractional CFO at FO Consulting group, my perspective is clear:

Private credit is flexible, but it is not „easy” money.

Because private lenders take on more tailored risks, their operational and due diligence demands are incredibly rigorous. They don’t just want backward-looking financial audits; they demand deep, sophisticated cash flow forecasting and stress-tested operational scenario models.

For Baltic companies looking to secure this wave of capital, the work doesn’t start at the pitch deck. It starts with building institutional-grade corporate finance integrity from the inside out.

The capital is coming to the Baltics. The question is who’ll be ready to benefit from it.

That readiness is what we build at FO Consulting group.

If you have questions or require assistance in navigating these rules, feel free to contact us for tailored advice.