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In the context of the successive increases in interest rates by the European Central Bank – which are “stopping” the investment plans of national companies – they are “unblocking” 4 new programs of the Hellenic Development Bank (HDB) through which low-interest loans are guaranteed: With the cost of money becoming more expensive every month, small and medium-sized companies have the possibility of claiming amounts starting at 10,000 and reaching up to 8 million euros.
Vangelis Durakis writes
These flexible financial products (3 co-financed and 1 guaranteed) ensure favorable financing conditions for small and medium-sized enterprises, both in terms of interest rates, which are subsidized, and guarantees for investments under the Development Law reaching 80%. The “preferential” financing even refers to working capital, while the rest of the programs focus on “green” investments and digital upgrading, according to enikonomia.gr.
Working capital and financing of investment projects
In detail, the 3 new co-financing programs available immediately will provide:
- Green Co-financing Loans with a total of available loan funds of up to 500 million euros for the financing of investments in SMEs that implement investments in energy improvement, the development of green service providers, the development of vehicle charging networks with low-polluting technologies (electric or hydrogen), as well as investments in renewable energy sources, with the ultimate goal of reducing emissions and protecting the environment. The duration of the loans will be from 2 to 10 years and their amount will vary from €80,000 to €8,000,000. It is possible to use a grace period during the first 2 years.
- Digitization co-financing loans with total available loan funds of up to 250 million euros for the financing of investments in SMEs, for the implementation of digitalization investments and digital updating of their operations/activities, with the aim of increasing their productivity, their expansion and the creation of high-quality start-ups value-added jobs. The duration of the loans will be from 2 to 10 years, and their amount will be from €25,000 to €1,000,000. It is possible to use a grace period during the first 2 years.
- Liquidity co-financing loans with a total of available loan funds of up to 600 million euros for the financing of working capital in SMEs. The interest rate subsidy applies exclusively to companies that have not previously received financing/help from an HDB scheme. The objective of the loans is to facilitate the proper functioning of the commercial circuit of the companies, as well as to face the increase in energy costs in the extraordinary current market conditions (increase in energy costs, prices of raw materials , inflationary pressures) and protect jobs, so that they successfully face the challenges of modern entrepreneurship. The duration of the loans will be from 2 to 5 years, and the amount of the loan will be from €10,000 to €1,500,000. It is possible to use a grace period during the first 2 years.
Which agencies “unlock” the programs
But which actors play a role in this development?
- The Guarantee Fund of the Financial Instrument of the Development Law (DeLFI) provides guarantees for obtaining long and short-term loans in order to implement the investment proposals submitted to the new development law N.4887/2022. DeLFI provides an 80% guarantee per loan and a total of €500 million in loans will be made available. 12 banks responded to the invitation of the Hellenic Development Bank-HDB and requested loans with a total budget of 932 million euros, an amount that currently doubles the resources available. It should be noted that the DeLFI funds come from the income from the Entrepreneurship Fund I (TEPIX I). This, according to HDB, highlights the importance of the operation of financial tools as a revolving financing mechanism with a multiple positive effect on the economy, since the NSRF funds 2007-2013, after financing a significant number of businesses, return to the market to support new business
- The Co-financing Portfolio Fund (its name is the Business Growth Fund) leverages public funds, in collaboration with the European Investment Bank (EIB) and through the participation of Banking Institutions, increases available loan funds to more than 2 billion euros. The first phase of the implementation of the Portfolio Fund has already been activated with the publication of an invitation to the Bank for three new funds to channel investment loans and working capital of up to 1,350 million euros to the market, while additional resources of 35 million Euros are expected to cover the subsidiary interest of the loans granted. It will be important to alleviate the cost of indebtedness for companies through these programs, since each loan will be 40% co-financed with public resources from these Funds, and will be granted without interest, while the remaining 60% will be financed by the Bank, the cost of financing will be reduced by 3% during the first 2 years of the loan with the application of the partial interest rate subsidy (subject to conditions). This translates into a total reduction in the cost of borrowing that can exceed 75% in some cases. There was great interest from Credit Institutions in their participation in these three new programs, since 13 Banks submitted their interest proposals with competitive interest rate offers and reduced collateral requirements. Its participation in the loan funds in this first phase of the programs is expected to reach 800 million euros.