In order to stimulate small business financing in the Baltic States, non-bank business lender Noviti Finance, and the European Investment Fund (EIF), have signed a cooperation agreement to give micro businesses and farmers better access to funding of up to €25,000.
The guarantee is funded by the Employment and Social Innovation (EaSI) programme of the European Union and is backed by the Investment Plan for Europe.
Noviti Finance, a non-bank lender based in Lithuania, will use the guarantee instrument to support micro companies in all the Baltic States (Latvia, Lithuania and Estonia). The Investment Plan for Europe allows the European Investment Bank Group to invest in more and often higher-risk operations, while EaSI aims to improve access to finance for vulnerable groups, micro-enterprises and social enterprises.
European Commission Executive Vice-President Valdis Dombrovskis said: “Promoting an economy that works for the people means encouraging the ambitions and entrepreneurial talents our citizens. Today’s agreement is an excellent step in that direction. The European Investment Fund’s €10 million agreement under the Investment Plan for Europe with Noviti Finance means that small businesses with up to 9 employees can benefit from loans of up to €25,000. This financial boost gives micro-enterprises in Latvia, Lithuania and Estonia a real opportunity to thrive and expand.”
Linas Armalys, Director of Noviti Finance, commented: “The agreement with the EIF means that, from now on, funding will be available to even more small businesses, on more favourable terms, with lower interest rates and in most of cases without collateral or personal sureties. Small businesses will be able to use the financing as working capital, or for business development, thus effectively helping to grow and manage risks due to the EIF-EaSI guarantee.”
Alain Godard, Chief Executive of the EIF, added: “This agreement is an important boost to small companies in the Baltics. Fintech and non-bank financing are playing an increasingly important role in giving micro- and small enterprises access to finance, and we are very happy to support Noviti Finance in playing this intermediary role in the region.”
Thanks to the EaSI Guarantee, funded by the European Union and implemented on its behalf by the European Investment Fund, Noviti Finance will be able to issue up to €10 million in microcredits to small companies in the Baltic States. Loans under this agreement will be available to companies with a maximum of 9 employees. The annual turnover of the company should not exceed €2 million.
A large proportion of Baltic companies meet the EIF criteria for receiving business support and as much as 86 percent of Noviti Finance’s customer base falls within the EaSI microfinance criteria in terms of company size.
“We are very pleased to have established this partnership. It is a great recognition and commitment to be included in the EIF-EaSI guarantee programme. We will be able to provide funding with this guarantee for an even larger number of small businesses that have been potentially ineligible for funding so far, and thus help them to grow successfully”, concluded Director of Noviti Finance, Linas Armalys.
Financing with the EIF-EaSI guarantee will be provided to companies with tenors of up to 24 months.
Noviti Finance is an alternative lender for small and medium-sized companies that has successfully operated in Lithuania for four years. The company has funded over 1000 companies from the country since its establishment in 2016. This month the company is launching its activities in Latvia.
The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
The EU’s Programme for Employment and Social Innovation (“EaSI”) aims at supporting the EU’s objective of high level employment, adequate social protection, fighting against social exclusion and poverty and improving working conditions. The microfinance and social entrepreneurship axis of the EaSI programme provides support to financial intermediaries that offer finance for micro-enterprises and social enterprises. One of the objectives is to increase access to microfinance, which includes microcredit i.e. loans of up to €25,000, in particular for vulnerable persons. The European Union has selected the EIF to implement the EaSI Guarantee Instrument on its behalf.