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EBRD, EC provide Hansa Capital with SME credit line
€30 million to support small and medium sized enterprises in the Baltic states
The European Bank for Reconstruction and Development is extending a €30 million credit line to Hansa Capital, the largest leasing company in the Baltic states, to help small and medium sized enterprises (SMEs) in Estonia, Latvia and Lithuania lease equipment and vehicles. This is particularly important in a region where more than 98 per cent of all companies are SMEs, and limited access to medium-term financing is a well-known constraint to growth.
The credit line, with a maturity of five years, is provided under the SME Finance Facility funded by the EBRD and the European Commission. Hansa will also receive up to €5.6 million from the EC’s Phare programme for administrative costs and to compensate for the higher risk of SME finance.
The credit line will fund leases ranging in size typically from €10,000 to €50,000. Noreen Doyle, EBRD First Vice President, signed the agreement today in Tallinn, where she was ending a three-day visit to the Baltic states. She stressed the significance of leasing for the development of the business environment. Leasing is increasingly important for entrepreneurs in the EU accession countries, making it easier for them to acquire new equipment and services. Smaller businesses often find it difficult to attract bank funding due to their short track record, or lack of capital or security. Leasing provides a suitable alternative, Ms Doyle said.
The SME Finance Facility was launched in 1999 under the Phare Programme to provide entrepreneurs with access to loans, leasing and equity finance from local financial intermediaries in the EU accession countries. Under the facility the Bank has committed €485 million, of which approximately €400 million have been disbursed in 15,000 loans.
Since its launch in 1999, the European Commission has committed €241 million to the Facility, including €130 million of grant co-financing in cooperation with the EBRD. The Phare programme is one of the three pre-accession instruments financed by the EC to assist the candidate countries of central and eastern Europe in their preparations for joining the European Union.
Originally created to assist Poland and Hungary in 1989, today the Phare programme encompasses Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Slovak Republic, Slovenia and Romania, helping them through a period of massive economic restructuring and political change. In 2000-2006, Phare is providing some €11 billion of co-financing for institution-building support. (For further information click here .)
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