Banks will issue loans up to 50,000 euros each to very small enterprises with an annual turnover of no more than €200,000 in the context of the new Guarantee Fund of the Hellenic Development Bank that is expected to start operating in early March.
According to estimates, some 8,000 very small enterprises are set to receive credit, having been denied access to the banking system due to their size.
The budget of the new fund, especially designed for this kind of companies, amounts to €450 million, and will be financed with €220 million by the Hellenic Development Bank, with the remainder coming from the participating commercial lenders.
The loans will be state-guaranteed, with a coverage rate as high as 80%, which means that the collateral banks will ask for will only cover 20% of each loan. The target of the credit is the enterprises that have been hit by the pandemic, suffering a significant turnover drop and belonging to the activity code numbers (KAD) the state has officially deemed as affected.
Besides the existing enterprises – i.e. those active in 2019 – credit will also be issued to newly founded companies – that is those established in 2020 or 2021. The ceiling of the loans will be €50,000, or 25% of the turnover of existing enterprises, while the interest rate will be determined by each commercial bank.
This fund will be the third financing instrument the Hellenic Development Bank has created since the outbreak of the crisis last March. It follows the second Entrepreneurship Fund (TEPIX II) and the Guarantee Fund (Covid-19) through which loans worth more than €7 billion have been issued: €1.3 billion concerns the loans via TEPIX II and some €6 billion concern Guarantee Fund issues. The new program, dubbed the “small guarantee program,” will also welcome any enterprises that have already received credit from TEPIX II, though not those that collected loans from the Guarantee Fund, aimed largely at large and medium-sized enterprises.