The European Investment Fund (EIF) and Lithuania’s SME Finance have signed a guarantee agreement under the InvestEU programme to provide financing for small businesses.

The partnership will facilitate more than €40 million in new financing in the form of loans, leases and factoring for micro and small enterprises and small mid-caps in the Baltics, Finland and the Netherlands.

The lending will primarily be given to businesses involved in innovation, sustainability or digitalisation projects.

SME Finance will also provide microfinancing of up to €50,000 for small businesses of ten employees or less with a yearly revenue under €2 million.

The loans will be backed by portfolio guarantees of up to 80 per cent from the EIF.

The EIF said that through the partnership it is aiming to address issues SMEs face in accessing finance in the region, quoting a recent EU study which showed that Lithuanian banks reject 32 per cent of loan applications from small businesses compared to the EU average of seven per cent.

“This agreement with the EIF means SME Finance will be able to offer financing to businesses on significantly better terms,” said SME Finance chief executive Mindaugas Mikalajūnas. "Our flexible and digital financing solutions already cover investment projects and working capital.

“We now offer even better pricing, reduced collateral requirements, or even no collateral at all.”

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