Compensation of Loan Interest
What are the benefits?
Enterprises or entrepreneurs can recover part of the funds for the interest paid on the loan and allocate these funds to other business needs.
What companies are eligible?
Small and medium-sized business (SME) entity: a micro, small or medium-sized enterprise or an entrepreneur (a natural person engaged in economic and commercial activities).
List of documents required for interest compensation measure
- Grant Agreement
- “One Company’s” declaration (see video instruction for completion)
- Declaration of the small- or medium-sized enterprise status (see video instruction for completion)
- Loan agreement or its copy/copies
- Copy of amended loan agreement (if signed)
- Statement from the financial institution on the amendment of the applicant’s loan agreement (if signed)
- Current loan schedule signed by the financial institution
- Current loan schedule in .xls format
- Statement of the applicant’s current account certified by an employee of the financial institution (or an equivalent document of another form with the same content (e.g., a copy of the current account agreement)
- Power of attorney of the head of the company and/or entrepreneur granted to the authorised person, if the application is signed by a person other than the head
- Copy of business licence or self-employment certificate (to be submitted only if the applicant is a natural person)
- Investment project (business plan) (applies to real estate acquisitions cases)
- Extract from the real estate register or vehicle registration certificate (applies to real estate, passenger vehicles and goods acquisition cases)
- Copies of the project agreement or decision financed by the EU structural funds or state or municipal institutions of the Republic of Lithuania (applicable if the loan agreement funds are allocated to finance the project or part thereof supported by the EU structural funds or state authorities of the Republic of Lithuania)
What is the maximum amount?
- Compensation is provided for up to 95 % of the actually paid amount of interest, but no more than 7 % of annual interest.
- The maximum period for which interest may be compensated is 36 months.
- Compensation can be granted within the limits of EUR 200,000 as de minimis aid.
How does it work?
In order to benefit from this measure, an application must be submitted to INVEGA through the electronic application system.
- The application is evaluated within 30 working days from the receipt of the duly submitted documents.
- After a positive decision, compensation of interest is paid out monthly.
- Upon the signing of the grant agreement, the borrower does not need to submit any additional documents to INVEGA. Compensation is calculated on the basis of the information received from a financial institution.
Information on adopted decisions can be found in the section Contract /Decisions in the electronic application system.
- Loan or financial lease (leasing) agreement concluded with a financial institution which, at the time of the assessment of the application, has a valid agreement with INVEGA on cooperation in providing compensation of interest (list of financial institutions).
- The loan agreement which was signed not earlier than on 1 January 2020 and is valid at the time of the application.
- Overdraft, factoring, letter of credit or bank guarantee are not considered as loans under this measure.
- If the loan consists of several portions with different purposes, compensation is provided only for interest on the portion of the loan that is intended to finance the eligible expenditure. In such a case, the portions of the loan must be segregated in such a way that it is possible to identify the purpose of the eligible portion of the loan at the time of disbursement of the loan, the repayment schedule of this portion and the interest rates applicable to it.
- When the loan is intended for the purchase and/or construction of immovable property, with a purpose of selling (transferring) to other persons and not for use in its activities, as well as the purchase or construction of residential real estate where the applicant is an entrepreneur.
- When the loan is intended for the purchase of non-commercial cars (class M1). This provision is not applicable to applicants whose activities are car rental, services provided by a driving school, passenger transport, including taxi, and passenger transportation, also for the purchase of special purpose vehicles.
- When the loan is intended for the purchase of used commercial vehicle (class N1), except for the purchase of special purpose vehicles.
- When the loan is inteded for the purchase of new commercial vehicle with a value exceeding EUR 25,000 including VAT, excluding special purpose vehicles.
- In the case of loans intended for the acquisition of shares, bonds or other financial assets of enterprises, payment of the balance of another loan, or payment of dividends or bonuses.
- When the loan is intended to grant a new loan to a third party, to cover the liabilities of third parties an the borrower, with the exception of refinanced investments which were carried out not earlier than 6 months before the signing of the loan agreement.
- When the loan is intended to supplement the working capital, with the exception of cases when the working capital is part of the loan, as specified in Sub-clause 3.6 of the Description of financing conditions for the measure.
- When INVEGA had taken a positive decision and had concluded grant agreements on interest compensation according to the Description of financing conditions for the Joint Measure “Partial Interest Compensation” of the European Union Funds for 2014–2020.
SMEs may not be bankrupt or undergoing restructuring or liquidation.
The SME’s main activity is not:
- Real estate transactions;
- Freight road transport and removals where loans are intended to acquire goods transport vehicles;
- Crop and livestock production, hunting and related services;
- Forestry and logging;
- Fishing and aquaculture;
- Specialised retail trade in arms and ammunition;
- Gambling and betting activities;
- Financial and insurance activities.