On June 16th the seminar of AECM - an association, connecting the European loan guarantee organizations – will be held in KredEx, in which 15 members of nine different countries (Germany, Portugal, Italy, Belgium, Romania, Czech, Austria and Lithuania) will participate.

The aim of the seminar is to introduce mezzanine financing products provided by the participants and to exchange information concerning the experiences gathered so far. Also, one of the important goals is to initiate a more detailed analysis on the current situation of mezzanine financing products offered in the European Union and on their possible future trends, and as a result present it as an input to the Commission of the European Communities, in order to plan ahead for the activities relating to this field.

The interest of companies for mezzanine financing products has increased in connection with the growth of awareness, but also due to the more conservative loan policies of the banks. Mezzanine financing is a way of financing where the features of both the equity capital and an ordinary bank loan are combined.

KredEx has been offering the equity loan as a mezzanine financing product since the year 2006. The loan is meant for businesses that have been active for some time, are successful and developing rapidly, but do not meet the standards of the banks to acquire loans for further expanding. KredEx will provide the company with the loan capital, similarly to the owner, without demanding any securities. The company pays interest for the use of capital and returns the loan later in the agreed manner. As the repayment of loan capital is generally due in the end of the loan period and the loan is subordinated to other liabilities of the company, the capital loan increases the company‘s equity capital notionally in the eyes of the bank, which in turn allows the company to take additional bank loans and develop even faster.  The loan is 1 - 16 million Estonian kroons, the minimum equity capital amount is 1 million Estonian kroons and the minimum weight in the balance should be at least 10%.