SME Bank has received an EIF guarantee up to EUR 100 million in new lending, opening up wider access to finance for SMEs

In order to give small and medium-sized enterprises (SMEs) more opportunities to grow, the Lithuanian neobank SME Bank has signed a guarantee agreement with the European Investment Fund (EIF) regarding financing of Lithuanian SMEs. The guarantee agreement on a EUR 100 million portfolio will enable at least 500 SMEs in Lithuania to obtain better credit conditions and expand faster.

This agreement is part of the European Guarantee Fund (EGF), an initiative run by the European Investment Bank (EIB) Group and participating EU Member States. With the support of the EGF, the European Investment Fund (EIF) will guarantee 70% of new SME Bank loans to SMEs, totalling EUR 100 million, and thus improve the conditions for lending.

“By working with the EIF, we can now offer not only simple, clear pricing and fast solutions, but also better credit terms. This agreement is an important event for all Lithuanian small and medium-sized enterprises, because with such a solid guarantee amount, we can properly contribute to the growth of many small and medium-sized enterprises in Lithuania,” says Mantvydas Štareika, CEO of SME Bank.

The agreement has been reached at the relevant time – a large proportion of EU enterprises are still seeking funding to help them cope with the ongoing effects of the COVID-19 pandemic. Access to the EIF guarantee for small and medium-sized enterprises is therefore particularly important.

„The European Guarantee Fund was set up together with Member States to make available much needed extra, favourable financing to SMEs, who are the engines of our economies, to grow their way out of this crisis. We’re glad to partner with UAB SME Bank to bring EU-financing to final beneficiaries, showing that European financing can really make a difference on the ground.” says Alain Godard, CEO of the EIF.

Vaida Česnulevičiūtė, Vice-Minister of the Ministry of Finance of the Republic of Lithuania, states that the agreement between the EIF and SME Bank is a significant tool in expanding the financing of Lithuanian SMEs.

„The COVID-19 pandemic continues to negatively impact businesses throughout the EU and globally. The European Guarantee Fund, as the EIB Group’s key crisis response instrument, has proved its effectiveness in terms of increasing firms’ access to finance, especially SMEs, thus contributing to economic recovery and fostering sustainable growth. We regard the guarantee extended to UAB SME Bank under the European Guarantee Fund as an important instrument in enhancing Lithuanian SMEs’ possibilities to receive the funding they need,” says Vaida Česnulevičiūtė.

The EIF’s portfolio guarantee is intended to partially reduce the credit risk of the loans and to provide financing to SMEs at competitive interest rates. Under this portfolio guarantee, SMEs will be able to obtain financing for investment loans (acquisition of production equipment, transport or real estate, or improvement of existing assets) and working capital (purchase of raw materials, turnover growth or real estate development).

The maximum loan amount guaranteed by the EIF per company is EUR 3 million. Lithuanian SMEs with less than 250 employees, balance sheet assets not exceeding EUR 43 million and annual turnover less than or equal to EUR 50 million will be able to benefit from this measure.