More than 526 million euro allocated this year to businesses through INVEGA measures
The national development institution Investment and Business Guarantees (INVEGA) has already allocated more than 526 million euro to business through various financial and grant instruments. The largest share of these funds, as much as 378.6 million euro, is intended to help businesses and entrepreneurs mitigate the effects of the pandemic. The submission deadlines for some applications for “COVID” measures are closing, deadlines for other applications are being extended and new direct business loans will be provided.
“We understand the anxiety and fears of the business about how to survive the second lockdown before recovering from the first. We can assure that INVEGA is determined to promptly implement the Government’s decisions in providing assistance to business,” said Kęstutis Motiejūnas, CEO at INVEGA. “We already have experience from the first quarantine in what financial assistance measures have been in demand, and which paid off only partially. The desire of business to find out what to expect as soon as possible is understandable, therefore both the Ministry of Economy and Innovation and the Government make great efforts to promptly coordinate the conditions of extended or new measures with the European Commission and inside the Lithuanian responsible institutions,” he continued.
Measures for the tourism sector will be extended
Although according to the description of the financial instrument “Guarantees to ensure the fulfilment of obligations of tour operators”, approved in the summer, these guarantees had to be provided no later than 31 December 2020, the head of INVEGA has good news. “We have already managed to coordinate the extension of this measure with the European Commission until 30 June of next year,” Motiejūnas assured.
15 million euro has been allocated from the state budget on the guarantees for the fulfilment of obligations of tour operators. To date, 29 guarantees have been signed for a total of 2.43 million euro.
Applications for the other incentive financial instrument for the tourism sector “Loans to travel and catering service providers”, were suspended a few days ago, as the deadline of this measure was closing. “I believe that the measure has been suspended only temporarily. The extension of the measure is being currently coordinated, and we plan to shortly resume the acceptance of applications,” emphasised the CEO of INVEGA.
The state provided 30 million euro for loans to tourism and public catering service providers. Since the start of soft loans, 41 applications have been approved and agreements have been signed with the applicant companies for an amount of 14.63 million euro. Additionally, 34 applications are in the process of evaluation or have been returned for clarification.
Loans in demand in the alternative finance market
“I can state with confidence that this pandemic year was a turning point in the alternative finance market. Non-banking financial institutions have become heavily involved in the state aid schemes for businesses and are actively cooperating with INVEGA. A year ago, we had only one financial instrument, which was implemented by one crowdfunding platform, and now we have more instruments, and it is very gratifying that the number of alternative financiers has greatly increased,” said Motiejūnas.
According to Motiejūnas, the popularity of the loan Avietė provided through crowdfunding platforms never waned. During the first lockdown, its conditions were improved, where as much as 100 per cent loans of up to 25 thousand euro can be financed from Avietė funds. As the pandemic continues, these conditions were extended until 30 June 2021.
A total of 8.9 million euro has been allocated for the financial instrument Avietė. The crowdfunding platforms cooperating with INVEGA signed 370 loan agreements with businesses during this year for an amount of 2.91 million euro.
A month ago, the conditions for the implementation of the incentive financial instrument “Alternative” were supplemented under the state de minimis aid regulation, ensuring more favourable borrowing opportunities: the annual interest rate was limited to 7 per cent, the amount of financing from the instrument was increased from 200 thousand to 500 thousand euro per loan, the share of the financed loan was changed from 90 to 100 per cent, and the duration of financing was extended from 24 to 60 months.
A total of 50 million euro has been allocated from the state budget funds to the “Alternative” measure, with a little more than a half remaining. Since the start of the measure, alternative financiers have already signed 592 loan agreements with companies in need.
“COVID” subsidy measures have expired
As provided for in the conditions of partial lease fee compensation, the deadline for applications was closed on 1 December of this year. As many as 6,120 applications were approved under this measure in a period of 7 months, about half a hundred more applications are being evaluated, and it is planned that the full amount of 40 million euro allocated for this measure will be used.
The deadline for acceptance of applications under another grant instrument – “Partial interest compensation” – for those borrowers or lessees, whose payment and repayment of the loan or lease was deferred as of 16 March, and who received 100 per cent interest compensation, also closed on 1 December of this year. However, the good news is that small- and medium-sized enterprises will continue to receive compensation of 95 per cent of interest paid on investment or working capital loans. Currently, 5,249 positive decisions on interest compensation were made for the amount of 23.4 mln euro.
Direct loans are expected
During the first wave of quarantine, loans in high demand were for the businesses most affected by COVID-19. The General Director of INVEGA acknowledges that the conditions of direct soft loans for business are now being intensively prepared together with the Ministry of Economy and Innovation. “I would very much like to promise that these loans will be available soon, but the situation needs to be assessed realistically, because, for example, the main criteria for granting these loans were agreed on only last week. Nevertheless, we expect quick procedures and hope that we will be able to start with these loans at the beginning of next year,” said Motiejūnas.