As of today, small and medium-sized enterprises that are in difficulty as a result of the coronavirus pandemic can apply for interest compensation for deferred loans or finance lease payments. Applications can be submitted to the national development agency Investicijų ir Verlso Garantijos (INVEGA). If the financial institution approves loan or finance lease holidays, the borrowers will be reimbursed 100% of the interest to be paid during the deferral period.
The government has allocated EUR 23 million in order to fully compensate for the SME’s interest in cases where loans or finance lease (leasing) payments have been deferred from 16 March 2020 due to the coronavirus pandemic.
“I am very pleased to announce that our interest compensation scheme is already operational and can be used,” said Kęstutis Motiejūnas, CEO of INVEGA.”Businesses in need of funds will be able to relieve the burden of not only by loan payments, but also interest. Through the joint efforts of state and financial institutions, this decision has been taken very quickly. We are now starting to implement it,” he added.
According to Mr Motiejūnas, documents must be presented properly when submitting the application, as this will determine the speed of processing. When submitting applications, entrepreneurs should check on the INVEGA website what additional documents they need to attach based on their status. For example, if one already has a loan guarantee, it is enough to submit a single company declaration, certificate of a current account, the grant agreement and a business license or sole trader certificate. However, additional documents related to specific project activities may be required.
The loan compensation scheme during the pandemic is focused on small and medium-sized businesses. The compensation payment procedure has also been revised to suit the interests of SME’s. For example, in view of the sudden shortage of working capital in the accounts of companies or self-employed entrepreneurs, more favourable terms for the payment of interest compensation have been provided in order to help them retain existing employees. Interest compensation will be paid monthly instead of quarterly. In this way, entrepreneurs will be able to use the full monthly amount previously allocated for the repayment of loans and interest for other purposes.
Interest on deferred loan and financial leasing payments is reimbursed for investment and working capital loans that meet the criteria for this measure. Companies will be entitled to loan or financial leasing interest compensation for a maximum of six months up to 31 December 2020.
“This measure is aimed at all entrepreneurs in difficulty: from self-employed small service providers to manufacturing companies employing dozens of people,” Mr Motiejūnas said. “We are ready to contribute wherever businesses face a shortage of funds. Interest compensation is one of the first measures that is already in place. I invite businesses to apply for it actively,” he added.
To secure interest compensation, small and medium enterprises must contact INVEGA directly and complete the application. Instructions on how to do this can be found here.