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Invega uses European Guarantee Fund to support Lithuanian businesses in wake of COVID-19 pandemic

Lithuanian national promotional institution Invega will make available €57 million in new lending for local SMEs under the “European Guarantee Fund” (EGF). The guarantee, provided by the European Investment Fund with EGF-backing, is expected to support more than 500 small and medium-sized Lithuanian businesses.

The EGF is part of the €540 billion EU rescue package in the wake of the COVID-pandemic.

Lithuanian national promotional institution Investment and Business Guarantees INVEGA has signed a guarantee agreement with the European Investment Fund. The guarantee, made available under the European Guarantee Fund, an initiative of the EIB Group and EU Member States, will support a portfolio of new SME financing by Invega of up to €57 million. Thus, Lithuanian companies can apply for favourable lending from Invega to help them if they need financing on their way out of the crisis.

"Especially young businesses feel the lack of financing, because without a credit history or when applying for an innovative business idea, banks often give a negative response. Therefore, we want start-up businesses to have the best and widest possible borrowing opportunities, and to be able to develop and grow faster. It is estimated that these guarantees will support more than 500 Lithuanian companies.” says Vincas Jurgutis, Deputy Minister of Economics and Innovation.

Kęstutis Motiejūnas, Director of INVEGA, commented: “INVEGA has just launched new direct START UP loans, aimed to fund small and medium businesses. We really want these loans to be very attractive and particularly useful for businesses. I am delighted that together we have found a way to make the borrowing process more accessible – guarantee provided by the European Guarantee Fund for the portfolio of these loans will perfectly fulfil our aspirations to help businesses, especially when there is a lack of collateral.”

Alain Godard, Chief Executive of the EIF, added: “The EIB Group and Invega have a longstanding relationship. Now that Lithuanian SMEs are still under pressure, I am delighted that the EIF can again partner with Invega to channel European financing to final beneficiaries, showing that Europe can really make a difference when it’s needed.”

Thomas Östros, Vice-President of the EIB, stated: “The EIB Group set up the European Guarantee Fund together with Member States to make available as much financing as possible for SMEs. They are the engines of our economies, and they need access to finance to keep that motor running. That’s exactly what we’re making possible here today.”

The “Start Up” facility loans, financed by the European Regional Development Fund and guaranteed by the EGF, will specifically target Lithuanian businesses, which are up to three years old since their establishment and have difficulties to access financing or the enterprises implementing the projects of social impact that have been operating for less than 5 years, supporting both investments and working capital. The EGF guarantee may be used to guarantee investment or revolving loans by 70 percent. The number of loans issued to one borrower shall not be limited. INVEGA will grant investment loans for the term up to 120 months, while the maximum amount available to one applicant will be 3 million euros. The loans of circulating assets will be granted for a term of up to 36 months, while the maximum amount available to one applicant will be EUR 200 000. The EGF-guaranteed loans will be provided on more favourable terms: the loan will be subject to a reduced interest rate, and the EGF guarantee will help to finance riskier projects, or applicants who do not have sufficient loan collateral.

Next Finance , October 3

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