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Lithuanian Rural Credit Guarantee Fund

Lithuanian Rural Credit Guarantee Fund

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Lithuanian Rural Credit Guarantee Fund

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  1. Lithuanian Rural Credit Guarantee Fund Danguole Čukauskienė Director, Lithuanian Rural Credit Guarantee Fund

  2. Rural Credit Guarantee Fund • Established in August 1997 • Legal Status – Closed Stock Company, Ltd. • Share capital – EUR 1,8 mill. (Reserves EUR 13,6 mill.) • State owned (100 percent) • The Ministry of Agriculture is in charge with responsibility for RCGF creation and supervision • State is responsible for all guarantees issued by RCGF (guarantee payments are made from the reserves)

  3. General shareholder Board of trustees Analyst Board Director Inner auditor Office administrator Deputy director Finance department Guarantee department Development and information department Organisational structure

  4. Mission To promote the economic development of rural areas in Lithuania, providing an opportunity for business entities not having enough collateral to receive a bank credit

  5. Fund’s activities • Guarantees for long-term investment credits and short-term credits: • Up to 70% of the unpaid credit amount • For young farmers – up to 80% of the unpaid credit amount • Administration of the state aid: • compensation of guarantee fee • compensation of insurance premiums and loan interests to guaranteed credit beneficiaries

  6. Scheme of activities Credit application Guarantee application CREDIT RECEIVER CREDIT INSTITUTION GUARANTEE FUND CREDIT GUARANTEE Guarantee liabilities fulfillment Credit and interest payment Guarantee fee payment Possibility to get credit Risk sharing Rural development

  7. Scope of activities • Geographical coverage of operations - national • Co-operation agreements with all Lithuanian commercial banks (11) • Since 1st of September, 2005, - credit guarantees to other financial institutions - credit unions (64)

  8. Guarantee beneficiaries: • Farmers, agricultural entities • Processing companies • Businesses in rural areas • Rural tourism • Services for rural population /hair dressers, footwear, apparel mending shops etc./ • Small and medium sized agricultural produce processing companies /mills, bakeries etc./ • Traditional crafts • Other activities in rural areas, increasing people incomes

  9. Guarantees for Long Term Credits • Maximum amount per guarantee: 116 thousand EUR per farm 260 thousand EUR per company /amount is not limited for EU supported projects/ • Guarantee fee: 5,5 percent of the guarantee amount /credit beneficiary pays 1.1 percent , state compensates 80 percent/ • Other conditions: Credit beneficiary shall finance 10 percent of the business project by personal assets

  10. Guarantees for Short Term Credits • Maximum amount per guarantee: 87 thousand EUR to farmers and rural businesses no limitations to processing companies • Guarantee fee: 2 percent of the guarantee amount /credit beneficiary pays 0,4 percent, state compensates 80 percent/

  11. Guarantee Issuing Procedure SME/Beneficiary 1) The SME applies for a credit to the Bank; 2) The Bank carries out the investment project or business plan feasibility study and makes the decision on the terms to issue the credit and applies for credit guarantee to Guarantee Fund; 3) Guarantee Fund evaluates the investment project or business plan, the Board makes the decision to issue the guarantee or not. Guarantee Fund informs the Bank about its decision; 4) The SME pays the guarantee fee to the Guarantee Fund, following the signing of credit contract; 5) Guarantee Fund issues the guarantee letter to the Bank and the Bank disburses money to the SME. 1 BANK 4 2 3 5 RCGF

  12. Guarantee Liabilities Fulfilment BANK • After The Bank cancels a credit agreement with the SME, bank should first of all sell collaterals (applying to RCGF) 2) Guarantee Fund pays guarantee payment to the bank, equal to outstanding loan amount after recoveries, up to 70% of unpaid loan amount 3)Debts are recovered from the debtor(guarantee beneficiary) Collaterals 2 Max. 70% of defaulted credit amount 1 RCGF 3 SME / Beneficiary

  13. Credits and guarantees, mill. EUR

  14. Guarantees by types of activities

  15. Thank you for your attention! www.garfondas.lt