EIF and Šiaulių bankas signed a guarantee agreement to finance small and medium-sized enterprises for EUR 25m
The European Investment Fund (EIF) and Šiaulių Bankas signed a guarantee agreement under the JEREMIE mandate in Lithuania, covering loans to small and medium-sized enterprises (SMEs).
According to this new agreement Šiaulių Bankas will provide additional loans from its resources to SMEs for a total amount of EUR 25 million (more than LTL 86 million). Such loans are guaranteed by EIF at 80%. Šiaulių Bankas will start providing these guaranteed loans in October this year over a period of two years.
“The portfolio guarantee for business loans is a new form of support to small and medium-sized enterprises in Lithuania. We are sure that the use of new crediting possibilities will accelerate the business expansion in Lithuania and stimulate investments. By applying the set assessment criteria and including the loan to the guaranteed portfolio, the corporate entities which could not receive the loan previously due to the insufficient collateral, from now on will be able to receive financing. Not only collateral requirements will be more favorable to borrowers, cost of loans will be smaller, but also the crediting process itself will be faster because clients will not have to apply additionally regarding the provision of guarantees”, says Donatas Savickas, the Deputy Chief Executive Officer and the Head of Finance and Risk Management Division of Šiaulių Bankas.
“We are very pleased to sign this important second agreement with Šiaulių Bankas which will enable the bank to further expand its lending volume to Lithuanian SMEs. The terms and conditions will be favourable to the entrepreneurs which is expected to create a further boost to the Lithuanian economy over the next two years”, says Graham Cope, Head of Region at the European Investment Fund.
The guaranteed loans will be provided to SMEs registered and operating in Lithuania, if the loans are not financed under the other Business Promotion Programmes financed from EU or national funds. Loans will be provided in Litas and Euros.
The guarantee product is implemented under the JEREMIE initiative, which is financed from the EU Structural Funds under 2007-2013 Economic Growth Operational Programme of Lithuania and managed by the EIF.
Before the new innovative engineering instrument will make a start, clients will be able to use other crediting product - risk sharing loans, being developed by Šiaulių Bankas and EIF under the JEREMIE mandate. So far Šiaulių Bankas has provided loans to SMEs for more than EUR 20 million (over LTL 70 million) and is planning to provide the same amount of loans till the end of this year. According to the cooperation agreement, signed between Šiaulių Bankas and EIF in January 2010, a total amount of EUR 40 million (more than LTL 138 million) has already been made available to SMEs.
About Šiaulių bankas
Šiaulių bankas controlled by the Lithuanian investors and the European Bank for Reconstruction and Development (EBRD) directs its activity towards the SME and provision of financial services to individuals. Šiaulių bankas is one of the banks having the largest share of the Lithuanian capital in the country: companies registered in Lithuania and individuals possess 71 per cent of the Bank’s authorised capital. The Bank possesses 52 territorial outlets operating throughout the Lithuania.
About the EIF
EIF's central mission is to support Europe's small and medium-sized businesses (SMEs) by helping them to access finance. EIF primarily designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. The EIF total net commitments to venture capital and private equity funds amounted to over EUR 5.4bn at end 2010. With investments in over 300 funds, the EIF is the leading player in European venture capital due to the scale and the scope of its investments, especially in the high-tech and early-stage segments. The EIF commitment in guarantees totalled over EUR 14.7bn in close to 160 operations at end 2010, positioning it as a major European SME loan guarantees actor and a leading micro-finance guarantor.
JEREMIE (Joint European Resources for Micro to Medium Enterprises) is a joint initiative launched by the European Commission (DG Regional Policy) and the European Investment Bank group to improve access to finance for SMEs in the EU within the Structural Funds framework for the period 2007 - 2013. JEREMIE enables the EU Member States and Regions to put money from the structural funds and also national resources into holding funds that can finance SMEs in a flexible and innovative way. Since the products will be provided on a repayment basis, funding will be reinvested and hence more SMEs will benefit from the EU resources.
To date, the EIF has signed 8 National and 3 Regional Holding Fund agreements.