First guarantees for loans of large companies

After the decision of the Ministry of Economy that state guarantees can be issued for loans of large companies in addition to credits of small and medium-sized businesses (SMBs) and amendments to the relevant legal acts, UAB Investicijų ir verslo garantijos (Invega) became entitled to issue loan guarantees to credit institutions for loans taken out by large companies or corporate groups from the beginning of this year. This month, three such guarantees have already been issued.

“Small and medium-sized businesses have already felt the importance of such guarantees. We hope that large companies or their groups which do not have sufficient liquid assets to be used as collateral because of the nature of their activities will also take advantage of this opportunity to have better access to the necessary financing for development,” Economy Vice-minister Marius Skarupskas says.

The first guarantee was issued for the working capital loan of UAB Belton Baltic. The company is a seller of stationery and, as other similar companies, is often faced with the need of additional working capital due to the seasonal nature of its activities. The company has already used an Invega guarantee but it was still a SME at that time. This time, the company received a maximum 80% guarantee for a working capital loan for business development, i.e. to acquire stationery supplies and cover their delivery costs. The loan was issued by AB DNB bankas.

“This is the first guarantee for a loan of a large company under the new guarantee instrument which came into effect early this year. We have already made two more decisions in favour of guarantees for loans of large companies under the new guarantee instrument. The other two guarantees of 67%  intensity were issued to AB Šiaulių bankas for working capital loans of UAB Lyderio grupė and UAB Eurointegracijos projektai, which means that business projects for two more large companies will be guaranteed soon,“ Invega CEO Audrius Zabotka says speaking about the first results of the instrument.  “Since the guarantees of Invega reduce the lending risk of credit institutions, they ensure that large companies also have better access to financing for business development projects”.

Invega guarantees help businesses access additional financing which would be unavailable to them without state support. Invega can undertake up to 80% of losses under the loans issued by credit institutions to large companies. Large companies can obtain Invega guarantees for loans issued by credit institutions which have signed cooperation agreements on the issue of guarantees with Invega. Currently, these institutions include AB DNB bankas, AB Šiaulių bankas, AB SEB bankas, Medicinos bankas, AB Citadele bankas and OP Corporate Bank plc Lithuania Branch.

The amount of an Invega guarantee for a loan of a large company may not exceed EUR 1.5 million (EUR 750,000 for large road freight companies) when the guarantee period is up to 5 years. If the guarantee period is more than 5 years but less than 10 years, the guarantee amount may not exceed EUR 750,000 (EUR 350,000 for large road freight companies) (thresholds applicable to de minimis aid).

Invega's obligations for loans issued to large companies under guarantees to credit institutions may not exceed EUR 20 million at any given time. Once this threshold is reached, no further guarantees for the loans of large companies will be issued by Invega.

Invega has been issuing state guarantees for loans taken out by SMBs since 2001 and for leasing (financial lease) of new plant and equipment since 2011.