Substantial European support for Lithuanian businesses hit by COVID-19 pandemic: up to €364 million
JOINT PRESS RELEASE Luxembourg/Vilnius, 13 December 2021
Substantial European support for Lithuanian businesses hit by COVID-19 pandemic: up to €364 million
- Five Lithuanian financial institutions agree guarantee transactions with European Investment Fund under “European Guarantee Fund” (EGF) to finance Lithuanian SMEs.
- The EGF guarantees, supported by the Government of Lithuania, will make available up to €364 million in new financing for SMEs dealing with the COVID-pandemic.
- The financing will be channelled to Lithuanian businesses through agreements signed with Faktoro, Finora Kreditas, Orion Leasing, PayRay Bank, and SEB Bankas, and is available as of today.
- EGF is part of the €540 billion EU emergency package for businesses and workers, agreed in the wake of the coronavirus outbreak.
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). 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.
Mindaugas Liutvinskas, Vice-Minister of Finance of the Republic of Lithuania, said: “Lithuania appreciates the efforts by the EIB Group in helping countries to cope with negative effects of the COVID-19 pandemic – on their economies as a whole, and businesses in particular. We see the EGF as additional to the measures our Government offered to the private sector to cope with the crisis. I am confident that the funds that will be made available to Lithuanian companies, in particular small and medium-sized enterprises, through the EIF guarantees will contribute substantially towards the sustainable development of the private sector and the broader economy.”
The Pan-European Guarantee Fund (EGF) was created by the European Investment Bank Group (EIB and EIF) and EU Member States as a Community response to the COVID-19 pandemic. It aims to increase access to credit for businesses in the wake of the economic effects of lockdowns and restrictions to contain the COVID-19 outbreak.
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.”
“The EGF was set up as an emergency measure, to help businesses affected by the pandemic. It allows banks to lend not only to the affected companies, but also to growing or young businesses, helping them to find their way out of the crisis. The support of Lithuania in making the EGF a reality, as well as its enthusiasm in making sure that these funds are channelled to the companies that need them, have been invaluable.” added Alain Godard, Chief Executive of the European Investment Fund.
More financing, better terms
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.
Comments from the intermediaries
Faktoro will channel up to €24 million to local businesses. “Faktoro is delighted to complement our existing cooperation with EIF with this new guarantee agreement. SMEs in the Baltic states have a crucial role in the health and development of our economies. Our clients in Lithuania, Latvia, and Estonia have renewed their investment plans and are ready to grow. This agreement makes funding not only cheaper for the final recipients but also more available. I think this is a huge win for everybody: businesses, governments, the European Union and finally the European population, as additional funding often increases productivity,” concludes Algirdas Gutauskas, CEO of Faktoro.
Finally, SEB Bankas is set to make available up to €50 million to local businesses under the new guarantee agreement with the EIF. “SEB Bank has an established position as the bank for entrepreneurs and business owners and has a solid customer portfolio which is based on long-term partnerships. The agreement with the EIF will ensure more effective financing for small and medium-sized enterprises, faster and sustainable Lithuanian economy recovery during the COVID-19 pandemic and strengthen our improvement in meeting a growing interest in sustainable finance among SMEs with a more attractive package. We believe that combined SEB Bank and EIF resources will provide new additional potential to finance more small and medium companies by contributing to the development of their projects, investing more in innovating their businesses with a strong emphasis on sustainability, particularly on reducing their CO2 footprint”, concludes Eglė Dovbyšienė, Head of Retail Banking at SEB bank in Lithuania.
Background information:
The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from Lithuania and other EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly €25 billion in guarantees, the EGF allows the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity and other financial instruments available to mostly small and medium-sized enterprises. The EGF is part of the European Union’s recovery package aiming to provide a total of €540 billion to boost those parts of the EU economy that have been hit the worst.
Press contacts:
EIB Group: Tim Smit, Tel: +352 691 286423, t.smit@eib.org – Twitter: @EIF_EU
Ministry of Finance: Justas Kačerauskas, +370 5 239 0109, Justas.Kacerauskas@finmin.lt – Facebook, LinkedIn
