Is a 9% interest too high? Eastern Europe ETA - Romania

June 24, 2025

by a searcher from University of Craiova in Craiova, Romania

Hi friends, ETA activity is pretty low in Eastern Europe, and maybe the interest rates are one of the main reasons, but not the only one. I am based in Romania and I am looking for acquisition opportunities in the 1-2M Euro range (300k-550k EBIDTA). I am limited to 2M Euro because that is the most I can get from a bank with a state guarantee (currently this funding program is paused by the government but some banks expect it to return). One problem is these credits are all in our local currency, RON, not EURO. The current interest rates for RON loans are around 9% for a 6-year, with a###-###-#### months break until I need to make the first payments. Let's say I target a business doing 300k EBIDTA selling for 1M Euro (kind of low valuation, but that's not the point of this thread). Assuming the seller would accept a 2-year note for 25% of the valuation and I bring in another 10 to 20%, would I be too optimistic to plan for repaying the other (550k to 650k) in 6 years with a 9% interest, on top of the 25% I need to repay the owner after 2 years? At the moment I don't know if I can get a longer-term credit so I am using the maximum accepted period (6 years) from the past years. I am new to ETA (no MBA background, but I am currently an operator in mid 7-digit software company) and I appreciate all the feedback that I can get. Thanks

Reply by a searcher
from University of Greenwich in Amsterdam, Niederlande

I’m not based in Romania myself, but since it’s part of the EU, I’d expect there to be EU-backed loan programmes available locally, often through intermediaries such as Banca Transilvania or CEC Bank. Instruments supported by the EIF or EIB, such as COSME or InvestEU guarantees, can help reduce interest rates or collateral requirements for SME acquisitions. You could check with your local bank or development agency to see if any of these are currently active in Romania. This could be a good way to access longer terms or more favourable financing.

Reply by a searcher
from Universität Mannheim in Munich, Germany

The important thing when interest rates are higher is that you don't overpay for the business and pay the debt down as soon as possible while keeping a healthy cash revenue in the company. Are those rates fixed? In Germany rates are around 5% fixed for 10 years but prices tend to be higher as a multiple than the US. At 9% I wouldn't want to pay more than 3 x EBITDA, maybe 3.5.

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