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According to the Cabinet’s preliminary position, the State intends to develop a support package for exporting enterprises with total value of EEK 5.7-6.1 billion. Its purpose is to improve the entrepreneurs' access to capital through providing different financial services. It includes the enhancement of existing KredEx opportunities and offering new solutions targeted to alleviate financial problems of sustainable and exporting enterprises. Proceeding from the state aid rules, the package is targeted to first and foremost to small and medium size enterprises, but there are plans to apply for a permit from European Commission to provide services for bigger enterprises (with more than 250 employees). The package will not include direct grants, there is no intention to give non-returnable aid or implement enterprises' obligations in another way by the State. Contents of the support package By virtue of established economic situation, volumes of existing loan and export guarantees will be increased together with 3 new additional measures, which have been developed and will be applied in cooperation with entrepreneurs, banks and other parties. 1. Subordinated loan based on progress Enterprises, whose self-financing rate is considered too low by a bank, will get an opportunity to a subordinated loan based on progress with certain fixed interest and certain interest depending on economic results of the enterprise. Subordinated loan is similar to the existing capital loan offered by KredEx; its main difference is the interest calculation basis. The loan amount is EEK 1-16 million, not exceeding equity capital of the enterprise. 2. Long-term loan resource offer to enterprises by single projects The loan will be offered first and foremost for investment projects finance through a bank or as direct loan in cooperation with a bank. Conditions are similar to regular bank loans - but mainly with longer repayment terms. 3. Credit line for banks. With the combination of monies from European structural funds and additionally credited ones from financial markets, a credit line for banks will be allocated for offering loans with longer duration as usual. Target group Measures will be provided for enterprises that belong to the target group specified below. 1. Enterprise, enterprise group or business project being active for at least 3 years;
2. Export turnover in recent economic year was at least EEK 8 million and not less than 20% of the enterprise's turnover. In addition to the target group membership, sustainable activities and service capability of the loan being applied for will be evaluated for each enterprise. Loan application will not be processed if, upon applying, equity capital of the enterprise does not meet stipulated requirements, has bad payment practices with loan payments of commercial banks, continuous payment defaults in payment default registry or if at least 2 of the following circumstances apply:
1. Liquidity coefficient is smaller than 0.8.
2. Equity capital share in balance sheet lower than 10%.
3. DSCR (loan cover coefficient) is smaller than 1.1 upon conservative estimating.
4. Turnover has decreased annually for more than 5%.
Upon processing loan applications, any other circumstances occurring regularly during evaluating loan service capabilities will be considered and inappropriate applications will be rejected.
In addition, enterprises or projects dealing with certain areas of activity are excluded from the target group, incl. enterprises engaged in agriculture, fishery and forestry management (primary sector production), real estate projects, financing circulating capital of retail and wholesale traders, weapon and tobacco industry, transport means obtainment for enterprises engaged in road transport services (incl. transport services for passengers), non-profit associations and public sector.
Further activities
There are plans to provide the services described above as soon as possible, supposedly in spring 2009. Appropriate information will be published on the KredEx webpage as well as in media.
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