The unclaimed liquidity of 400 million euros of the Hellenic Development Bank

By Leonidas Stergiou

As the debate over the financing of the economy and the access of small businesses to bank lending erupts, guaranteed loans of up to 80% amounting to 400 million euros from the Hellenic Development Bank (HDB) risk being left unavailable.

For this reason, the Hellenic Development Bank is making efforts to extend the programs of the Third Guarantee Cycle for Covid-19 for very small businesses and the Guarantee Fund EAT-TMEDE which expire at the end of June. At the same time, there is a small absorption of the Audiovisual Production Loan Guarantee Fund.

Guarantee Fund (Third Cycle)

According to information, out of the 414 million euros of the Third Guarantee Cycle for Covid-19 for very small businesses, 125 million euros have been allocated. It concerns companies with a turnover of up to 1 million euros that have not been included in the two previous cycles of the program. The aim is to provide new regular working capital loans to micro-enterprises. The aim is to meet the increased liquidity needs from the epidemic crisis.

The loan amount starts from 50,000 euros and reaches up to 250,000 euros, with a guarantee rate of 80%. That is, for a loan of 50,000 euros, the Hellenic Development Bank guarantees 40,000 euros. The maximum amount of collateral reaches 20% of the loan.

This practically means that a very small company can, through one of the cooperating commercial banks, apply for a loan of 200,000 euros, for which the Hellenic Development Bank will guarantee 160,000 euros, while the remaining 40,000 euros can be left as cash collateral to cover the collateral (20%).

EAT-TMEDE Guarantee Fund

The EAT-TMEDE Guarantee Fund was created to provide loan guarantees in order for thousands of small and medium-sized companies and freelance scientists in the field of engineering, design and construction contractors (TMEDE) to gain access to lending in order to carry out projects or projects. From the budget of 67 million euros, to date 27 million euros have been allocated. In this program, the maximum loan amount is 200,000 euros, the guarantee is 80% and the collateral up to 40% of the loan.

Loans for Production of Audiovisual Works

The Audiovisual Production Loan Guarantee Fund was created to provide loan guarantees through partner banks, in order for SMEs operating in the audiovisual industry to gain access to finance. This program also includes startups.

It started last year and ends at the end of 2025. However, to date only € 3 million has been allocated from the program’s total budget of € 67 million. Through this program, the loans can reach 900,000 euros for investments or working capital, the guarantee rate is 80% and the maximum percentage of the necessary collateral is 50%.

Advantages

Some of the advantages of these loans are that, due to the given guarantee, the borrower enjoys either a lower interest rate on the loan or less (or no) collateral. Also, the data of the banks show the retention of red loans in business credit due to the availability of many co-financed programs.

Low absorption

Nevertheless, about 400m euros are expected to meet small business liquidity needs by June. Lockdowns, government support measures such as repayable advances and moratoriums on debt payments (to the State and banks) that have helped boost deposits and corporate liquidity may have reduced demand for co-financed loans.

Another reason is that some companies have reached the limit of state aid and guarantees they can receive, while others do not meet basic credit criteria (overdue debts, Tiresias, tax and insurance awareness, etc.). On the other hand, there are many new companies that could meet the needs for working capital and investment, especially in the current period, due to rising costs.

Access

These programs are accessed through the nine cooperating banks of the Hellenic Development Bank, namely Alpha Bank, National Bank, Piraeus Bank, Eurobank Bank, Attica Bank, Optima Bank, Epirus Cooperative Bank, Karditsa Cooperative Bank, Thessaly Cooperative Bank.