European Union (EU) is ready to assume some of the risks associated with loans granted to small enterprises, in exchange for commitments from banks to increase lending to such small and medium enterprises (SMEs). In order to take over some of the risk associated with crediting SMEs, the EU has in the past decade, through the "Guarantee Fund for SMEs", provided guarantees worth 440 million euros, which covered a loan portfolio reaching 28 billion euros. Over 370,000 small businesses have benefited of this support, according to organisers of the conference on access to finance of SMEs, staged in Bucharest by the European Commission (EC), on the EU Finance Day for SMEs. Via the "SMEs Rapid Development and Innovation Fund," the EU continues to invest in venture capital funds for innovative SMEs and high growth rate. Shares held by the European Investment Fund (EIF) in such funds allows the supporting of SMEs that have recently entered the market (start-ups) by attracting new investors. Economic growth and creating jobs are the basic objectives of the EU, according to the Strategy of Lisbon. Through the Framework Programme for Competitiveness and Innovation, EU holds financing instruments for SMEs in total value of 1.1 billion euros, until 2013. Other European programs devoted to SMEs are The Seventh Framework Programme for Research and Technological Development (FP7) and the support service program for SMEs, Enterprise Network. European Commission organises various events in all European capitals on the occasion of the "Finance Day for SMEs". Source: Agerpres.
Capital increase for SMEs loans
The National Fund for Small and Medium Enterprises’ Credit Guarantee (FNGCIMM) will benefit from a capital rise totaling 223 million lei this year, FNGCIMM chairman Aurel Saramet told a press conference on the Fund’s activities, on March 11. “Our portfolio statement was on the verge of getting to the limit stipulated under the Basel Agreement, which made the capital increase necessary. Given that we can grant guarantees of nine euros per every euro of capital, our capacity of supporting the economy will significantly grow,” said Aurel Saramet underlining that 2010 is going to be a difficult year. In 2009, FNGCIMM provided guarantees of 1,642 billion lei, which supported loans of 3.473 billion lei, but the 2010 increase is estimated to only 1.8 billion lei value in terms of guarantees for loans of 3.806 billion lei. The most numerous loans guaranteed by FNGCIMM are directed towards Bucharest-based beneficiaries (19 percent in 2008 and 18 percent in 2009) and from the North-East Region (19 percent in 2008 and 17 percent 2009). Last year was characterized by an exponential rise of payment requested guarantees (89 million as opposed to 3 million in 2008 and an estimated 120 million lei for 2010). With respect to the 2009 payment requests, 44 percent were due to insolvency issues, while 56 percent due to banks’ forced execution proceedings. The 2010 estimation is 43 percent for insolvency cases and 57 percent for the forced executions. “FNGCIMM had a 2.6 million lei profit in 2009, although the Fund’s objective is not to be profitable, but to allow the SMEs’ and other companies’ access to crediting,” said Saramet.
