Entrepreneurship Promotion Fund 2014—2020 (EPF2)

What are the benefits?

Soft loans granted under the instrument Entrepreneurship Promotion Fund 2014–2020 financed by the European Social Fund (EPF2) provide natural persons or micro and small companies with favorable conditions to receive funding to start a business or develop an existing business operating for up to 1 year.

What companies are eligible?

Micro and small companies, natural persons working under the business license or self-employed whose status conforms to the SME status under the SME law.

Individuals who intend to set up a business and/or recently established entrepreneurs (up to 1 year since the entity’s registration).

Terms and conditions

The decisions on Loans under the instrument Entrepreneurship Promotion 2014–2020 are made by credit unions of the LCU Group, the instrument is coordinated by the Lithuanian Central Credit Union and managed by LTD “Investment and Business Guarantees” (UAB “Investicijų ir verslo garantijos”).

The instrument Entrepreneurship Promotion 2014–2020 is designed to help natural persons or micro and small companies to start and develop start-up business by issuing loans for up to EUR 25,000 and providing consultations.

The entrepreneurship promotion loans are designed to finance investments and/or working capital. A loan may not be intended to refinance the existing liabilities of borrowers towards financial institutions or to cover costs which are financed under a non-repayable subsidy.

Applications and business plans are required to be submitted to credit unions. Document forms are available on the website of the Lithuanian Central Credit Union (LCCU). To register for a consultation on the financing terms and conditions, please contact the consultant. Please keep in mind that according to terms and conditions of the measure, loan administration fee is not applicable to the borrower.

After the consultation and an agreement between the credit union and project manager reached, credit union assesses the ability to repay loan and calculate the guarantee needed. In case the resources do not cover the required amount of the loan, the credit institution may apply to INVEGA for an individual guarantee.

The recipients of loans in the framework of Entrepreneurship Promotion Fund 2014—2020 can use the global grants financial instrument Subsidies for business start-ups. The instrument, designed to compensate labour costs of workers employed under a contract of employment, aims to provide addition financial incentives to borrowers, facilitate market uptake in the initial stage of self-employment and encourage the creation of new jobs as well as maintain the existing ones.

Groups of persons facing difficulties in the labour market or organizing ones’ businesses (the priority group) will have the ability to receive higher compensation of labour costs in respect to people outside the priority group.

EUR 21.5 million has been allocated for the issue of these loans from the European Social Fund.

Implementation

Report on loans granted under the instrument Entrepreneurship Promotion Fund 2014 – 2020 (Lithuanian language version).

What is the maximum amount?

The maximum loan amount is EUR 25,000. Loans will be provided for a maximum term of 120 months. The interest rate is 3-month EURIBOR (only for 10 per cent of the loan) + a fixed interest margin of 3 per cent (margin of the credit union).

In order to receive a loan in a credit union, a natural person must become a member of the credit union and a legal entity must be an associated member of the credit union. In compliance with the Law on Credit Unions of the Republic of Lithuania, a member of the credit union must:

  • pay a one-time non-refundable initial membership fee, the amount of which is established by the board of the credit union. In the practice of credit unions, the amount of the initial membership fee is between EUR 0 and EUR 100. In order to find out the amount of the initial membership fee, one needs to apply to the credit union in which he/she intends to be a member.
  • hold the main share in the credit union which would be at least of the size specified by the Law on Credit Unions of the Republic of Lithuania and the articles of association of the credit union. Pursuant to the provisions of the Law, the amount of the share contribution may not be lower than the main share by more than EUR 30; however, the credit union can establish a different amount in its articles of association. The share contribution paid for the main share may be refunded only after the membership in the credit union has expired.

Credit unions apply additional share contributions related to the credit amount. The amount of additional share contribution is determined by the board of the credit union on a case-per-case basis, having regard to the risks of the loan, its guarantees, etc. and seeking to ensure and not to violate any norms restricting the activities of the credit union. In practice, the amount of additional share contribution varies from 0 to 20 per cent of the credit amount. The share contribution paid for the additional share may be refunded even before the membership in the credit union has expired. The refunding procedure is carried out pursuant to the provisions of Article 14 of the Law on Credit Unions.

The current amount of shares applicable in credit unions: credit union

The specification of the project funding conditions is available here >>

How does it work?

Applications are required to be submitted to the credit unions, members of the Lithuanian Central Credit Union (LCCU). Document forms are available on the website of the Lithuanian Central Credit Union (LCCU). In need of assistance with the business plan, the applicant can register for a consultation. In case the guarantee lack, the credit union can apply to INVEGA for in individual guarantee.

In addition, borrowers of soft loans under the EPF2 can benefit from global grant instrument Business Start-up Subsidies and receive a compensation of labour costs for every employee working under an employment contract.