The first 200 million euros in funding from the Institution for Growth in Greece (IfG) will start flowing to small and medium-sized enterprises in September, offering loans with lower interest rates through the country’s banks, the government announced on Tuesday.
The ministers for development, Costis Hatzidakis, and finance, Yannis Stournaras, along with Ulrich Schroeder, the managing director of German investment bank KfW, yesterday presented the IfG action plan, which provides for the recycling of the first loans, which could reach up to 700 million euros in the next seven years.
Hatzidakis stated that the IfG and the joint action with KfW for SMEs will offer “a liquidity lifeline for smaller enterprises that is more necessary than ever.” Stournaras added that the German bank’s support is crucial, while Schroeder voiced an appeal for “potential partners” and “interested parties who could join forces with us and offer more funds.”
Hatzidakis confirmed that contacts are continuing with France, whose loan and deposits fund may contribute to the IfG, saying, “I would like to think that we are at the conclusive stage in our talks with all other interested parties.”
According to the plan presented yesterday, out of the first 200 million euros in credit, half will come from Greece and the other half from KfW, guaranteed by the German government. The interest rate for SME recipients will be between 1 and 3 percent below the current levels.
The main criterion for the selection of recipients will be that applicant SMEs should employ no more than 250 people. However, Schroeder said it will be the banks that determine the final conditions of the loan contracts, weighing up the risks on a case-by-case basis.
Loans will amount to a maximum of 1 million euros and are to be used for investments, cash needs or even to refinance working capital. Enterprises will initially repay only the interest, before paying back the rest at the end of the loan period.
The IfG will also drastically cut the bureaucracy associated with issuing credit to SMEs. The plan is for all 200 million euros to be distributed by mid-2015, although Schroeder argued this could happen before the end of this year.