European Merchant Bank is continuing its cooperation with the national development institution Investment and Business Guarantees (INVEGA) and will offer more financing options to its customers. Under the agreement with INVEGA, EMBank will provide over EUR 6 million in loans to businesses with a state guarantee.
According to Aurelijus Šveikauskas, EMBank’s Deputy CEO and Head of Local Sales, this guarantee instrument will improve the financing opportunities for SMEs, especially in terms of collateral requirements.
“Small and medium-sized businesses make up the majority of businesses in Lithuania. As many as 4 out of 5 enterprises fall into this category. Naturally, this sector is very important for the country’s economy and we want to contribute to the development of this business sector. However, quite often the lack of collateral limits clients’ access to the necessary financing, and the portfolio guarantee is the solution to this problem,” says Mr. Šveikauskas.
Under the financial instrument Portfolio Guarantee 3, the maximum amount of a loan or leasing transaction is EUR 1.875 million. Road freight transport businesses are eligible for a maximum amount of EUR 937,500, while primary agricultural production businesses are eligible for a maximum loan amount of EUR 234,400.
“This is one of INVEGA’s most popular financial products to help businesses get the financing they need when faced with unattractive or insufficient collateral, and we are implementing it together with selected financial intermediaries,” says INVEGA’s Senior Project Manager Agnė Gedminė.
The maximum duration of a loan with a portfolio guarantee is 10 years for investment loans and finance leases. Meanwhile, working capital loans have a maximum duration of 5 years and financing in the form of a credit line has a maximum duration of 3 years.
The portfolio guarantee ensures that 80% of the loan, credit line or lease is repaid to the financial institution. This rate is applied to each transaction included in the loan portfolio at the bank’s discretion.
“We believe that this facility will be most relevant for companies in the manufacturing, trade and services sectors wishing to borrow relatively small amounts to finance working capital or investments. I encourage businesses to take an interest in the financial instruments available and to seek advice if they have any questions. Small and medium-sized businesses generate tens of billions of euros in revenue, and we will do our utmost to ensure that this engine of the economy does not stall,” said Mr. Šveikauskas.
