Portfolio Guarantees for Lease Transactions
What are the benefits?
The instrument Portfolio Guarantees for Leasing Transactions Funded from the European Regional Development Fund (hereinafter – “Portfolio Guarantees for Leasing Transactions”) is aimed at facilitating access to funding for small and medium size enterprises (SMEs) when an SME is unable to provide a collateral that is attractive or sufficient to a financial institution.
What companies are eligible?
Small and medium-sized enterprises.
What is the maximum amount?
The maximum guaranteed amount of a leasing transaction can be €1,875,000, or €937,000 in the case of organisations involved in the carriage of freight by road. Funding under the instrument cannot extend beyond 120 months.
The instrument Portfolio Guarantees for Leasing Transactions is worth €8m.
How does it work?
A portfolio guarantee secures the repayment of 80% of the principal amount of leasing to a financial institution. Normally, in the case of guaranteed leasing transactions financial institutions will require a smaller down payment and apply a lower interest rate as compared to leasing transactions concluded at market conditions. A portfolio leasing guarantee is issued as de minimis aid as defined in the Commission Regulation (EU) 1407/2013.
Investments eligible under a portfolio guarantee for leasing transactions are the following:
that is intended to be used in the provision of production services (production of goods, materials, energy) or construction activities and not intended to be used in a household, leased, used to provide transportation services or in real estate operations, and that is separate from residential premises and non-residential buildings.
In order to use this financial instrument, business start-ups and small and medium-sized enterprises are required to apply directly to the financial institution and agree on funding. The financial institution will assess the project, ability to repay leasing and calculate the amount of guarantee needed. Subsequently, the financial institution will submit a request for a guarantee on a leasing as well as other related documents to INVEGA.
The structure and documentation of leasing transactions eligible under this instrument shall be prepared by the financial institutions concerned subject to their own internal regulations and procedures.