Minister of Development and Competitiveness Kostis Hatzidakis and Finance Minister Yannis Stournaras, along with CEO of German investment bank KfW, Ulrich Schröder, announced today, the establishment of the Fund for financing SMEs, which will be operating under the Greek Investment Fund (IfG).

The initial capital of the Fund is 200 million EUR, with an equal and equitable contribution between Greece and Germany. However, with the recycling of the funds, the total financing which will be given to SMEs for the next seven years (the duration of the IfG loan to Greek banks), could reach up to 700 million EUR.

As announced, the purpose of the Fund is to provide Greek SMEs with affordable and flexible busienss loans which will help mitigate the negative effects of the Greek liquidity crisis.

Key features and benefits of loans

-Eligible Greek banks will receive long-term flexible debt capital to finance the SMEs with revolving credit. In this way, in 7 years they could provide a total funding up to 700 million Euros.

-The financial advantages, including reduced interest rate will go unchanged from Greek banks, to SMEs. It is estimated that interest rates will be 1-3 points lower than the current rate in the Greek market, depending on the borrower’s profile.

-Loans for new investments and working capital. The refinancing of existing loans on working capital is allowed. Typically, the banks will issue new loans, which will not be able to go towards paying existing obligations. In practice, there can be refinancing at a lower interest rate.

-Ability to pay only interest and repayment of principal when the loan matures. This represents an increase in liquidity for busiensses.

-Eligible SMEs from all business sectors and all regions of the country.

-Less paperwork of businesses to banks in relation to existing financial tools regarding the justifications for the adoption and monitoring of loans.

Timetable

1. Commitment of eligible banks and signing of agreements between the Fund and Greek banks: June 2014.
2. Disbursement of loans to Greek banks: July 2014.
3.Signing of loan agreements between Greek banks and SMEs: September 2014.
4. Absorption of the total available funds: December 2014- Middle of 2015

It is reminded that:

The IfG will be an “umbrella-fund” with three sub-funds:

1.SME financing, with working capital and potential to refinance existing loans of viable enterprises.
2.Capital participation in sustainable SMEs with growth potential
3.Financing of regional infrastructure projects, mainly outside the big cities.

The Greek government will contribute 350 million to the overall IfG plan.

Memoranda of cooperation with the European Investment Bank and Onassis Foundation for particiation in the Greek Investment Fund with 50 and 30 million respectively, have already been signed. At the same time, talks with the French government are underway, after the latter’s expression of interest through partaking in the Fund through the Caisse des Depots, or Banque de Public Investiments, as well as with other investment banks and funds.