EU money to finance SMEs

banks published in the January 22, 2010, 18:01
Grants are available even for business start-ups (start-ups) Hundred million in the bank waiting to be borrowed by the Romanian companies, on favorable terms, with interest rates lower than standard, but which keep men-still too high, especially in U.S. dollars. Funds are provided by European credit institutions such as EBRD and EIB, which will help entrepreneurs affected by the crisis. Even if access to money implies acertain bureaucracy, procedures for funding have been simplified. In addition, recipients may receive a grant and free membership to prepare investment projects. Metaplast Ltd., a manufacturer of automotive equipment and plastic parts, is one of the companies that succeeded last year in the middle of the crisis, to obtain a loan on favorable terms of financing from EBRD and EIB through BCR. The company became the supplier of the Renault-Dacia, so had to make large investments, million to build a new plant with state of the art equipment, meeting the French car manufacturer's standards. The company has several advantages that accessing credit. First, received free technical assistance provided by consultants for EBRD investment project preparation and documentation verifying its implementation. In addition, he received a financial incentive (grant) representing 20% of eligible project funded by the EU and Romanian Government.
Can finance up to 100% of eligible costs Is that the rates of loans of the European banking funds may be awarded funding to cover full project costs, excluding VAT component to be provided by the developer. But that, say bankers, firms must have to be sure that they can obtain financing from the Bank's own funds at least 15% of the investment. And business start-ups (start-ups) can apply for financing sources EIB or EBRD bankers saying that already has such loans. Obviously there are restrictions imposed by international financial institutions, making it impossible to grant credits for sensitive areas such as financial, estate, or those affecting the environment. Another problem is the guarantees necessary for entrepreneurs to obtain credit. One alternative for those who lack sufficient collateral can represent Credit Guarantee Fund for SMEs, but entrepreneurs should be aware that these costs and not be granted without a thorough analysis of business viability, states Ramona Ivan, Executive Director Department of Financial Institutions of the BCR.
Currency risk has become a problem Interest credit sources from the European Investment Bank (EIB) is slightly smaller than a standard loan, whose cost, national currency, however, were very high last year and still remain at levels too high . NBR data show that the average interest on credits in MDL extended by banks to companies rose over 21% in early 2009, down from 15% to end. More affordable financing in the euro, whose interest has increased from 9% last year but have now fallen to 5% for loans of over one million euros and 7.8% for loans with lower values. Foreign currency loans remain as two times cheaper than the national currency, which is why the euro funding an overwhelming share of total corporate loans. And funds provided by European banks come in euros, Romanian banks sharing their so easy to pass on benefits customers lower costs. Currency risk has become a bugbear for many but, as major fluctuations, over 15% of the national currency over the past three years. "Appropriation of funds EBRD or EIB can provide both RON and euro, but it is important that the recipient understand the risks that faces a loan in foreign currency, especially if its revenues in local currency," says Ramona Ivan. It states that the loan currency decision is taken only after the bank and customer currency risk calculations for evidence to assess whether funding in euros with interest lower than the actual benefit to the recipient. BCR EIB signed a new agreement worth 75 million euros. The costs of such a loan is at least one percentage point lower than those of a regular credit, it is a requirement imposed by the EIB to support companies to grow under stress conditions. The Bank has funds available from European resources of around 300 million euros. Other conditions for accessing funding from international financial institutions refer to their use for the creation of new jobs and investing in safe areas and the future, and production, environmental protection or energy efficiency. "For example, the EIB loan of 50 million developed by BCR in the past two years, over 40% of finance firms have been awarded projects in agriculture and 70% of funds were provided for co-funded projects non-reimbursable European funds, BCR representative stated. It says that BCR has funded so far around 3,000 projects from EU funds, representing approximately 30% of total loans granted by Romanian banks in this area.
Viable projects yet to be taken Cheap money or grant of the European Union may be an attraction for companies, but they fail to burst banks in difficult economic conditions and the reluctance to launch new investment. But there are areas of high potential business, and environmental projects, energy efficiency or agricultural, little known in Romania and which banks are willing to finance them, but leave the expected projects. The key to success in financing such projects is finding entrepreneurs and conviction about the benefits they can obtain information and financial education in the field is quite poor, bankers say. But the main problem in post-accession EU funds absorption is the inability of managers to size projects depending on interests, the business plan and the resources necessary to carry out investment projects. "There are many companies that fail to obtain approval from the European fund management authority, if they are forced to quit because they find the necessary resources and guarantees the project", says Ramona Ivan. Difficult economic context has led entrepreneurs to display oatitudine "standby" conservative regarding long-term investment, state and representatives of Alpha Bank, the bank involved in EIB and EBRD projects. "Even in these conditions but there are companies that have failed to manage the business through the crisis and to maintain a good situation, which will enable further development and thus accessing new credit. Credit application companies will begin to rise, are already signs. In addition, the EIB facility is addressed and the public sector, municipalities, which certainly will access investment loans in 2010, say representatives of the institution. Alpha Bank contracted earlier this year, a loan of 50 million from the EIB to finance small and medium enterprises. SME loans granted by EIB loan has many advantages, one of them and that will reduce the interest rate of 0.25% compared to standard state bank. And Piraeus Bank signed a financing agreement with EIB worth 50 million euros to finance SMEs. "We intend to use the entire feature in the next 18 months", says the bank's representatives. They noted that offers customers a range of benefits, including costs under the standard, fast loan approval and credit consulting the documentation. BRD offers SMEs and type EIB and EBRD loans.