The Lithuanian Ministry of Finance and the European Investment Fund (EIF) have announced substantial new support for Lithuanian SMEs in the context of the Pan-European Guarantee Fund (EGF).
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Guarantee agreements with five Lithuanian financial intermediaries will make available up to an additional €364 million in new financing for businesses dealing with the economic fallout of the COVID-19 pandemic. Thanks to capped and uncapped guarantees with Faktoro, Finora Kreditas, PayRay Bank, Orion Leasing and SEB Bankas, Lithuanian SMEs will be able to apply for loans with new, more advantageous, conditions.
Thomas Östros, vice president of the European Investment Bank Group, said: “Lithuania was not spared from the societal and economic effects of the COVID-19 pandemic. We are glad that the Ministry of Finance supported our proposal for a Pan-European Guarantee Fund that has been sustaining European businesses across the continent. Today’s signature vindicates that decision and makes sure that thanks to the EIF, Lithuanian companies will have access to the necessary funding to find their way out of the crisis.”
Under the terms of the guarantees, each eligible loan included in the portfolios will be guaranteed at 70% of the credit amount. This significantly increases the likelihood of a positive loan decision and reduces the banks' risk, as in the event of a failure, the bank will be able to recover 70% of the potential loss thanks to the EGF. The financial intermediaries will independently manage and administer the loan portfolio, and the final decision to provide financing resides with them.
The total portfolio of new available financing guaranteed by these EIF transactions will amount to up to €364 million. The available individual loan amounts differ per intermediary, and can range from €10 000 to up to €6 million, depending on which bank the SMEs choose to do business with. For financing provided with EGF-backing, the credit terms are more favourable than borrowing without a guarantee. Loans may be used for investment projects, to build or acquire assets, and to finance the turnover of businesses. ■