In Lithuania, state funds are being channelled to support businesses through the Lithuanian state company INVEGA, which has announced a list of measures in three main areas.
Portfolio guarantees for loans 2 (PGP2) and leasing 2, and export credit
- Available to small, medium-sized and large enterprises, if one of the following conditions is met:
- o turnover has decreased by at least 30%;
- o financial flows generated are now insufficient to cover existing liabilities;
- o the value of the emergency coverage (critical liquidity) ratio has fallen below 1 (value deteriorated compared to 31 December 2019).
- INVEGA will guarantee ‒ to banks and other financial institutions, including leasing companies ‒ fulfilment of loans already granted as well as new loans. Loans that can be secured by the guarantee include:
- o unsecured investment loans (including leasing transactions) and working capital loans (excluding reverse leasing transactions) for which the repayment schedule has been extended or deferred repayment was applied, without compromising other loan repayment terms, not earlier than on 16 March 2020;
- o new working capital loans (including reverse leasing transactions) to support corporate liquidity.
- The measure does not apply to loans granted to companies which are:
- o directly involved in organizing gambling; or
- o operating in sectors such as production, processing and sale of arms and ammunition, tobacco & tobacco products and distilled alcoholic beverages.
- Guarantee up to 80% of the loan principal and up to a maximum of EUR 5 million for one or more loans to one enterprise.
Export credit guarantees
- Intended for micro, small and medium-sized enterprises in operation for more than one year with latest annual income of over EUR 100,000.
- The maximum of all export credit guarantees for each exporter cannot exceed EUR 2 million.
- The maximum of all export credit guarantees for each buyer chosen by the exporter cannot exceed EUR 750,000.
- Covers up to 90 per cent of the aggregate of all deferred payments.
Portfolio guarantees for factoring 2 (PGF2)
- This measure is intended to guarantee covering factoring limits granted by financial institutions to micro, small and medium-sized enterprises.
- Up to 80% of the factoring transaction limit will be guaranteed, with a maximum of one factoring limit per company EUR 1,875,000 or EUR 937,500 for road freight transport companies.
- The maximum financing period for a factoring transaction is 12 months.
Loans to cover invoices due up to EUR 500,000
- For small businesses which are not receiving payments for invoices issued from 1 January to 31 March of this year.
- Up to 85 per cent of an unpaid invoice could be covered by the loan.
- The applicant and the company that failed to pay the invoice (the buyer of goods or services) must not belong to the same group of companies.
- The applicant must have retained at least 50 per cent of employees, compared to their numbers as of 1 March 2020.
- The company that failed to pay the invoice must be included in the list of businesses affected by the spread of COVID-19 (the list is prepared and updated by the State Tax Inspectorate).
- Loan repayment begins 6 months after disbursement. Period of repayment: 12 months (with the possibility to extend up to 36 months).
Alternative financial instruments up to EUR 200,000
- This measure is designed to promote financing of small and medium-sized enterprises by alternative financiers.
- Financing is provided in the form of a loan, factoring or financial lease (leasing).
- An alternative financing provider or alternative financier may be:
- a financial institution established and operating in Lithuania (except for credit institutions and related companies);
- a collective investment company entitled to invest its funds in the form of a loan, or management companies of a collective investment company, if their management is transferred to management companies.
- Until 1 December 2020 an alternative instrument can be used to refinance existing loans if the financing conditions for existing borrowers are improved.
- Maximum period of alternative financial instrument: 24 months.
Loans to businesses most affected by COVID-19 up to EUR 1 million
- INVEGA plans to provide (via financial institutions) soft loans for companies to maintain liquidity.
- The measure is targeted at small and medium-sized enterprises operating in the most affected sectors, if:
- the activity of the company is completely banned and turnover either does not take place or has fallen by over 30%;
- the company meets the minimum criteria of a reliable business (such as – not insolvent; must have no record of tax penalties);
- the company retained at least 50 per cent of its employees, compared to their numbers as of 1 March 2020.
- The size of the loan will be limited to the amount needed to cover the company’s necessary expenses in the period 16 March 2020 to 31 July 2020.
- Loans will be issued on a monthly basis. Maximum loan up to EUR 1,000,000.
- Loan repayment begins 6 months after disbursement. Repayment period: 24 or 36 months.
- Loans are subject to a fixed interest rate:
- up to 12 months – 0.1 per cent, and
- from 13 to 36 months – 0.19 per cent.
Compensation of loan interest 100%
- Available to small and medium-sized enterprises.
- The purpose of the measure is to reimburse 100% of the interest payable (up to 7 % annually) on loan or lease payments for 6 months, for loan repayment terms deferred after 16 March 2020.
- Part of the wages paid to employees can be reimbursed.
- Interest compensation is paid monthly.
Partial compensation of lease payments for businesses
- Available to legal entities and entrepreneurs.
- Tenants wishing to claim partial rent compensation must meet the following requirements:
- the tenant’s main activity during the quarantine was prohibited and the tenant did not perform this activity during the prohibition period;
- the landlord has reduced the rent to the tenant by at least 30% after the date of the quarantine announcement;
- the tenant’s annual income in 2019 did not exceed EUR 50 million or the book value of the property on 31 December 2019 did not exceed EUR 43 million;
- the lease agreement was signed no later than 15 March 2020 and at the time of applying was valid and registered at the Centre of Registers;
- at the time of applying for partial rent compensation, the tenant had submitted a set of annual financial statements to the Centre of Registers for the year 2019.
- The maximum partial rent compensation monthly is 50 % of the rental fee.
- The total amount of financing to one tenant may not exceed EUR 800 000.
- Compensation covers the period from 16 March 2020 until 31 July 2020.
- Applications can be submitted until 1 December 2020.
Temporary payment moratoria for private obligators and legal entities
The Association of Lithuanian banks has announced two temporary moratoria.
Moratorium for private obligors
- In force from 17 April 2020 until 1 July 2020.
- Credit institutions undertake to change the payment schedules of real estate-related credits, consumer credits and leasing issued to their clients – natural persons.
- Other conditions of the loan agreement must not be changed.
- The obligor must meet the following criteria:
- must not have had significant (more than 30 days) delay in fulfilling obligations for the past 12 months prior to announcement of the COVID-19 quarantine;
- must not have been declared insolvent or bankrupt;
- must indicate a COVID-19 pandemic-related cause for deterioration of the financial situation (loss of job, loss of income, or other).
- Repayment of mortgage loans will be postponed up to 12 months.
- Repayment of consumer credits and private leasing will be postponed up to 6 months.
Moratorium for legal entities
- In force from 24 April 2020 until 1 July 2020.
- Credit institutions undertake to change loan repayment schedules which provide for interim repayments, including:
- financing instruments for working capital with an obligatory decreasing utilization limit; and
- lease agreements that provide for interim repayments of the value of the leased asset, e.g. amortised loans granted to their clients.
- Other conditions of the loan agreement must not be changed.
- The moratorium is not applicable to loans granted by using State funds, e.g. Loans to businesses most affected by COVID-19 as described above.
- The client must:
- not have had significant (more than once and for more than 30 days) delays in fulfilment of its obligations to financial institutions for the past year prior to announcement of the COVID-19 quarantine;
- not be declared insolvent;
- not have been subject to reorganization;
- have positive equity capital for the 2019 financial year;
- indicate a COVID-19 pandemic-related cause for deterioration of the financial situation.
- Loan repayments will be postponed for up to 6 months.