Business start-ups and/or micro and small companies operating for up to 1 year, natural persons operating as sole proprietors or under a business certificate will soon be able to apply for business start-up loans for up to EUR 25,000 under the terms more favourable than market conditions. The Ministry of Social Security and Labour has earmarked EUR 22.8 million from the European Social Fund for these loans.
“We are looking for ways to improve access to financing for business start-ups and companies in an early stage of business development and assistance for implementation of their business plans. A similar financial instrument for business newcomers offered in 2007–2013 proved to be a major success as start-up companies created almost 3,600 new jobs. So we believe that this new instrument will encourage people to look for various business ideas and make it easier for them to decide to realise them,” Audra Mikalauskaitė, Deputy Director of the EU Structural Assistance Department of the Ministry of Social Security and Labour, says.
Micro credits will be available to all persons wishing to become self-employed but priority will be given and more significant additional financial incentives for the creation of new jobs such as partial compensation of labour costs under the instrument Business Start-up Subsidies implemented by the Ministry of Social Security and Labour will be provided to the groups of persons encountering labour market or business organisation difficulties: persons under 29 years of age, disabled persons, persons above 54 years of age, unemployed persons, women and those who will create “green” jobs.
Loans for investments and/or working capital under the terms more favourable than market conditions will be issued by a consortium of 42 credit unions of the LCU Group represented by the Lithuanian Central Credit Union (LCCU).
“Credit unions of the LCU Group have already proven their ability to be excellent advisors and business financiers to private and corporate customers as they issued EUR 20 million in loans in almost 6 years under the Entrepreneurship Promotion Fund, an instrument supported from the Structural Funds 2007–2013. We expect that the new financial instrument will enable credit unions to issue soft loans for EUR 1.25 million to Lithuanian people and business start-ups by the end of 2017,” LCCU Deputy Head of Administration Mindaugas Vijūnas says.
According to Mr. Vijūnas, from 2 November Lithuanian people and business start-ups will be able to apply to 42 credit unions of the LCU Group for soft loans and receive professional consultations on business start-up and development. Loans will be issued until 30 September 2023. One borrower will be eligible to one loan only which will have to be repaid in up to 10 years.
“In addition to soft loans, business start-ups will also be able to apply for INVEGA guarantees which cover part of collateral required by credit institutions from the middle of October. These guarantees will be provided from the resources returning to the Entrepreneurship Promotion Fund which was financed from the Structural Funds 2007–2013 and has been successfully implemented. These resources made it possible to create a new financial engineering instrument Guarantees for Business Start-ups of the Entrepreneurship Promotion Fund,” UAB Investicijų ir verslo garantijos (INVEGA) CEO Audrius Zabotka says.
About the Entrepreneurship Promotion Fund 2014–2020 financed under the European Social Fund
The purpose of this fund of funds is to boost the demand for employment promoting the entrepreneurship of people, especially those encountering difficulties on the labour market. The fund of funds (EPF 2014–2020) was set up under a trilateral agreement between the Ministry of Finance, Ministry of Social Security and Labour and INVEGA. This trilateral agreement will implement the financial instrument Entrepreneurship Promotion 2014–2020 of the operational programme for investment of European Union Funds in 2014–2020. The amount committed to the Fund is EUR 24.5 million.
The EPF 2014–2020 is estimated to issue at least 1,000 loans for business start-up or development. These new businesses are expected to create at least 1,800 new jobs. The Fund aims to help at least 440 persons encountering difficulties on the labour market to become self-employed. The instrument will be implemented until 2023.
The EPF 2014–2020 is managed by INVEGA which selected the LCCU representing the consortium of 42 credit unions to manage the financial instrument.
This Fund follows on the Entrepreneurship Promotion Fund which was financed from the Structural Funds 2007–2013 and has been successfully implemented. Redirecting part of the investments of the European Union Funds in 2014–2020 towards new entrepreneurs, especially those that encounter difficulties on the labour market, indicates that the entrepreneurship promotion policy is consistent and its continuation is ensured. Entrepreneurship promotion instruments are aimed at generating long-terms effects since business financing issued in the form of loans returns and the resources can be reused to finance other small and medium-sized businesses.