The guarantee contract was signed on Thursday by Vice-Minister of the Economy and Innovation Vincas Jurgutis, Director of INVEGA Kęstutis Motiejūnas, European Investment Fund (EIF) representative Hubert Cottogni and Vice-President of the European Investment Bank (EIB) Thomas Ostros.
‘Young businesses are particularly affected by the lack of funding; the lack of credit history or merely representing an innovative business idea often lead to a negative response from banks. Therefore, we aim to ensure that start-ups have the best possible borrowing opportunities and are able to grow faster. More than 500 Lithuanian companies are expected to benefit from these guarantees’, says Vice-Minister of the Economy and Innovation Vincas Jurgutis.
‘The EIB together with the Member States have set up a European Guarantee Fund to provide the widest possible funding to SMEs. SMEs are the engine of our economy and they need access to finance to make this engine work. This is what we are doing today’, says the EIB Vice-President Bank Thomas Ostros.
Small and medium-sized businesses currently have access to new direct start-up loans which come from the European Regional Development Fund. This measure is aimed at businesses up to 3 years old or companies engaged in social impact projects and operating for a period of up to 5 years; businesses can apply for loans of up to EUR 3 million.
‘We want these loans to be extremely attractive and business-friendly, so we have found ways to make borrowing more affordable. The guarantee provided by the EGF for the portfolio of these loans will perfectly fulfil our aspiration to help businesses, especially when they have no collateral’, says Director of INVEGA Kęstutis Motiejūnas.
The 70 % EGF guarantee will be available for investment and working capital loans. The loans supported by the EGF guarantee for SMEs will be provided on more favourable terms: funding will be provided to applicants who have no sufficient collateral for the loan; a reduced interest rate will be applied to the loans; higher risk projects will be funded.
According to Motiejūnas, borrowers will not need to additionally apply to INVEGA for guarantees. Having evaluated the information provided by the applicant regarding the loan granting, INVEGA will decide whether the loan is eligible for the EGF guarantee portfolio. The EGF guarantee will be granted for loans until 31 December 2022.
The EGF is established by the EIB Group and the EU Member States which contribute financially to the Fund. The EIF will provide support to INVEGA under the EGF Guarantee Facility.
UAB Investicijų ir Verslo Garantijos (INVEGA) is a national development institution established by the Government to help Lithuanian business to obtain necessary funding. Its mission is to promote the growth and competitiveness of Lithuanian business; guarantees provided by INVEGA help to address the problem of insufficient or unattractive for financial institutions collateral; access to finance is facilitated through the administration and direct provision of preferential loans, subsidies and risk capital measures.
