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Estonian Enterprise Policy

Estonian Enterprise Policy. I Estonian Enterprise Policy 2007-2013. Fields of Action. Development of Knowledge and Skills. Measures: Training grants Awarness of enterprise Diagnostics` instruments Quality of management Consulting Mentoring Practice grants. Supporting Investments.

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Estonian Enterprise Policy

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  1. Estonian Enterprise Policy

  2. I Estonian Enterprise Policy 2007-2013

  3. Fields of Action

  4. Development of Knowledge and Skills Measures: Training grants Awarness of enterprise Diagnostics` instruments Quality of management Consulting Mentoring Practice grants

  5. Supporting Investments Start-up grant and start-up loan Investment grants for renewal technology Venture capital fund State guarantee for loans and leasings Contact moderation between investors and enterprises Supporting infrastructure investments Development of investor networks

  6. Internationalisation Measures: Export-plan program Export consortiums Services for foreign investors Fair grants Support for R&D actions

  7. Development of Legislation Evaluating the effect of legislation for enterprises Co-operation with enterprises, enterprise`s organisations and public at creating new laws and documents Unified contact-centres for rebating red tape and simplifing procedures for enterprises

  8. Gages

  9. II Support package

  10. Short term challenges for businesses Liquidity Cutting of costs Access to finance

  11. Financing activities is complicated Banks are very conservative, not easy to get decisions Value of collateraldecreasing Interest ratesnot favourable Difficult to renew loans Decisions are changed Difficult to get factoring limits Environment-, infrastructure-, and other projects financed by EU in need for cofinancing

  12. Big interest to export guarantees Markets are uncertain Private insurers have raised prices and reduced limits Companies are searching new markets New chances Interest for factoring significantly higher Hard to get payment deadline for Estonian import KredEx provides export guarantees, - outside OECD and EU or - financeperiod 2 years and more

  13. State measures for recovery A.Changing the conditions of already existing measures B.Export guarantees C.Project-based financing together with banks D.Additional subordinated loan E.Credit-lines for banks

  14. State intervention main principles Targeted to strengthen companies international positions Relieves financing problems, business risks are covered by entrepreneurs Only sustainable companies can get help, all companies are examined separately Target group is exporting companies Patient money but not for free Most of all financing deal, not cost Cannot endanger euro State interventions are temporary, exit is planned Intervention must be sufficient to have macroeconomic influences

  15. A. Changing the conditions of already existing measures Guarantees for loan and bank guarantees - Loan guarantee limit increased by 700 mln kr (800 mln to 1.5 Bln Kr), large-size of companies was also added to target group Start-up loan – Guaranteed loans amount increased by 500 000 kr (500 000 kr to 1 bln kr), target group expanded up to 3 years old companies All measures implemented by Enterprise Estonia were also looked through in purpose to meet enterpreneurs needs in new economic situations and avoid bureaucracy.

  16. B.Export guarantees Creating a private law based credit insurance company Insurance company offers national export guarantees as well as market-based export guarantees Creating the insurance company helps to diversify risks, involve more competence in the development of export insurance area and to meet better entrepreneurs needs Export guarantees limit increased by 2Bln kr(1 Bln to 3 Bln)

  17. C. Co-financing bank loans Project-based cooperation with banks Onlysustainable and export targeted projects are suitable. Longer payment periods

  18. D. Subordinated loan Companyreceives subordinated loan Due to loan banks are more likely to finance company, betterloan managing When problems occure, bankloan is paid first, subordinated loan is secondary Subordinated loan has lower fixed interest + additional interest based on the success (calculated on revenue or profit) Subordinated loan provider doesn't participate in management, is not a shareholder or partner

  19. E. Credit-line to banks 2 Finance markets (loan) 1 State resources(capital or loan) State 400 mln Additional funds 800 mln KredEx 1200 mln 3 Low-interest loans for banks, KredEx/state will cover bank risks Swedbank SEB …..bank …..bank 4 Loans to companies. Bank will add marginal and cover compny credit risk Company Company Company Company Company Company 3 State guarantee against bank bankrupcies State

  20. Complete package

  21. Long term challenges not changed • Higher productivity • More sophisticated products and services for more up-scale markets • New knowledge and skills base • More ambition in internationalisation and export

  22. Sinu logo Current usage of SF resources • Obligations: totally ca 4 453 milj - 75,8%/period budget • Payments: totally ca 1 582 milj - 26,9%/ period budget

  23. Current usage of support package Subordinated loan – 14 projects=121 mln (total 400mln) Project-based cooperation with banks – contracts over 207mln+100mln in proceeding (total 400mln) Credit line for banks – EIB loan, 2 contracts with banks=1,2bln EEK Guarantees are needed > 100mln from project-based resources to loan guarantees for enterprises.

  24. Next year focuses • Enhance the usage of current measures • Interim evaluation of measures • New actions in entrepreneurial education • Funding for young innovative enterprises

  25. Thank you! Henry.Kattago@mkm.ee

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