Lithuanian bank “SME Bank” and the European Investment Fund have signed an agreement to provide an additional EUR 57 million in financing for small and medium-sized businesses under the InvestEU program. The guarantees supported under this program enable lending to small and medium-sized enterprises that find conventional bank loans completely or almost inaccessible. In addition, for the first time, the bank will finance projects in the cultural and creative sectors. This agreement will enable SME Bank to increase the total financing available under the program to more than EUR 95 million.

“The first projects successfully financed under the InvestEU program have shown that small and medium-sized businesses are in great need of such financing. Therefore, we have agreed with the fund to expand access to financing for small and medium-sized companies, which under normal conditions would not receive loans from banks”, says Lukas Baškys, Head of Business Banking at SME Bank.

According to him, the guarantees provided by the fund open a window of opportunity for those companies that have limited or no collateral, are young, fast-growing, have no credit history, which traditional banks deem too risky to finance. In addition, under the program, it is possible to borrow for a longer term (up to 10 years), allocating a smaller part of own funds and receiving more bank financing.

Businesses that operate and invest in the following strategic areas that enhance competitiveness within the EU are eligible to apply for funding:

1. Sustainability and mitigation of climate change – a total financing portfolio of EUR 43 million. Funded projects are related to climate change mitigation and adaptation, building renovation, transition to the use of renewable resources and waste reduction, and development of sustainable agriculture and forestry;
2. Innovation and digitalization – a total financing portfolio of EUR 29 million. Funding aims to increase the competitiveness of small and medium-sized businesses by introducing innovations and digitizing operations. This includes rapidly growing businesses or those involved in scientific research and experimental development, strengthening cyber security, training, and upgrading qualifications;
3. Cultural and creative sectors – a total financing portfolio of EUR 14 million. Cultural and creative businesses in Europe generate more than 4% of GDP, and companies in the sector account for 10% of the entire service sector. Despite the high importance of this sector, it faces financing difficulties due to the special nature of the business, the risks involved, and the lack of assets suitable for collateral. Guarantees help to overcome this gap in the financial market and allow lending to small and medium-sized businesses, for example, related to book and press publishing, fine arts, architecture, performing arts, audiovisual media, educational activities;
4. Microfinancing – a total financing portfolio of EUR 9.4 million. Funding is aimed at micro-enterprises, including self-employed individuals and social enterprises, which are unable to expand or even launch due to a lack of collateral and credit history, and which traditional banks consider too risky to finance. Guarantees allow financing of very small companies and individuals who want to establish and develop such companies. This aims to encourage entrepreneurship and job creation, active participation in the labor market, especially vulnerable groups of society.

SME Bank’s small and medium business portfolio, backed by European Investment Fund guarantees, has already exceeded EUR 22 million. According to the updated agreement, the bank will be able to lend EUR 95 million by 2027.