Within the context of the first Greek securitization of business loans effected in 2007, National Bank of Greece signed an agreement with the European Investment Bank (EIB) to enhance access by SMEs and MidCaps to bank financing, on favorable terms. National Bank of Greece has thus helped reduce the high financial costs that Greek businesses have to pay, while also giving a boost to their competitiveness.
Specifically, under the EIB's agreement for the financing of SMEs and MidCaps, NBG will channel on particularly favorable terms a total of €215 million for the financing of investment and business plans by Greek businesses.
The financing is provided by NBG on the basis of the said agreement between the Bank and EIB, with the support of the European Fund for Strategic Investments (EFSI), which was created within the context of the Investment Plan for Europe, by virtue of Regulation (EU) 2015/1017 of the European Parliament and Council of 25 June 2015.
Aim of the Programme and benefits for financed enterprises
The aim of the program is to provide SMEs and MidCaps with the funds they need to grow their operations at reduced financial cost.
The European Investment Bank
The EIB – a bank of the European Union established in 1958 under the Treaty of Rome – participates side-by-side with NBG in the financing of investment programs that form part of the objectives of the European Union. For as long as the loan satisfies all eligibility criteria for financing by the EIB, NBG grants to the borrowing firm a financial bonus reflected in the interest rate, which is at a discount compared with the annual interest rate that NBG would charge on a similar loan without the participation of the EIB. This financing is also subject to the guarantee of the European Union, through the European Fund for Strategic Investments (EFSI).
In addition, if the beneficiary fulfils the specific youth employment criteria set by the EIB under the "Jobs for Youth" Initiative, an additional financial advantage is provided which is also reflected in the interest rate.
Eligible for EIB funding are businesses that meet all of the following criteria:
- They are established, operate and will invest within Greece;
- They should be business not active in non-eligible sectors, as such are described in detail hereinbelow "Non eligible businesses";
- They are small and medium sized enterprises ("SMEs") with less than 250 employees (full-time equivalent) or
- They are MidCaps enterprises with minimum 250 and less than 3000 employees (full-time equivalent).
Non eligible businesses and activities:
Businesses considered as not being eligible for financing within the context of the said program are:
- Holding companies whose sole activity is the management of holdings and/or investments in other businesses, as well as leasing companies associated with a specific construction company;
- Companies which are active in the following fields related to:
i. Activities targeting the production of weapons and ammunition, arms, military or police equipment or infrastructures, and equipment or infrastructure which result in limiting people's individual rights and freedom (i.e. prisons, detention centres of any form) or in violation of human rights;
ii. activities targeting the production or facilitating the use of gambling and related equipment;
iii. activities targeting tobacco manufacturing, processing, or specialist tobacco distribution, and activities facilitating the use of tobacco (e.g. "smoking halls");
iv. activities involving live animals for experimental and scientific purposes insofar as compliance with the "Council of Europe's Convention for the Protection of Vertebrate Animals used for Experimental and other Scientific Purposes" cannot be guaranteed;
v. activities which give rise to environmental impacts that are not largely mitigated and/or compensated (see also section 3 about conformity with EU directives and national laws on environment);
vi. activities considered ethically or morally controversial or which are forbidden by national law, e.g. research on human cloning;
vii. the purchase of goodwill; the purchase of intangible assets16 that could lead to or enforce a strong market position of the Final Beneficiary (i.e. a market share of more than 20% of the relevant market); the purchase of licenses or rights for mineral resource exploitation;
viii. activities constituting pure real estate development activity;
ix. activities constituting pure financial transactions (such as the purchase of shares, or any other financial product);
x. any other sectors identified as non-eligible sectors on the list of NACE codes provided to the Borrower.
Eligibility criteria for the "Jobs for Youth" Initiative
Under the EIB's securitization program as above, an additional discount on the applicable interest margin is offered to all businesses that promote employment for young people aged between 15 and 25, in the context of the EIB's Jobs for Youth Initiative
In order to qualify for this initiative, a Final Beneficiary needs to fulfil at least one of the following three criteria:
- The Final Beneficiary confirms to have hired in the last 6 months and still employs at least 1 (5 for MidCap enterprises) young person (or plans to hire at least one young person (at least 5 for MidCap enterprises) in the coming 6 months), calculated from the signature date of the Sub-Financing Agreement signed with the Borrower, or
- The Final Beneficiary offers vocational training to young persons, or internships/training programmes for young people, or
- Τhe Final Beneficiary has an active cooperation agreement with a technical college or school or university to employ young persons (e.g. during summer internships).
All investments in projects located in Greece and expenses budgeted for up to €25 million carried out by means of eligible Investment and Business Plans for the growth of SMEs and MidCaps in the least three (3) years as of the date of signing the financing agreement with the firm are financed up to the amount of €12.5 million. MidCaps may receive financing for amounts over €12.5 million and up to 50% of the total budget only once they have received written approval for such from the EIB.
Expenses related to the following are excluded:
- Purely financial transactions,
- Duties/tariffs and non-recoverable taxes, such as VAT.
The loan may not be used for real estate activities or for the provision of consumer loans. Real estate activity excluded from the EIB's financing includes the purchase, construction or renovation of property for the purposes of resale or leasing the same to third parties. The loan may be used for the purchase of assets (e.g. construction equipment), though not real estate, for the purposes of leasing them to third parties.
Investments and expenses that may be incorporated in the Business Plan include:
- Purchase, renovation, expansion of tangible assets (including land) only if such is essential for the investment, at a rate of up to 10% of the financing amount. Purchase of agricultural plots is not eligible for inclusion.
- Purchase of patents and licences is eligible where they are necessary for the technical implementation of the Project;
- Intangible assets such as:
- Development, planning and financing costs during the construction phase of a tangible asset;
- R&D expenses (fees, development costs and gross salaries directly associated with the research, development, and innovation components of the activity);
- Building up of distribution networks in domestic or other markets inside the EU (asset and/or trademark acquisition, operational costs and labour costs)
- Generation change (i.e. retirement of the previous owner) or staff-related enterprise transmission, allowing for a continuation in economic activity of the respective enterprise. The scope of the financing is however limited to those cases where both buyer and the entity to be sold are eligible enterprises as defined in this Eligibility Criteria Schedule, and the total financing need for the operation does not exceed EUR 5m (excluding own funds). The acquisition of enterprises in other contexts than in the one described in this paragraph is not eligible for EIB financing; and
- Working capital of a more permanent nature or through a Revolving Credit Line. Specifically, businesses can receive financing to cover obligations related to their transaction turnover as part of their regular business activities. Expenses eligible for financing include (but are not limited to) the purchase of raw materials and other components of the manufacturing process, inventories and general expenses, commercial claims and claims from sales to non-end consumers.
- The total cost of each Business Plan may be up to €25 million for SMEs and up to €50 million for MidCaps.
- Business plans that have been included in EU subsidy schemes can be financed by up to 100% of the investment value (sum of the amount of the subsidy and the loan) or up to 70% of the investment value (sum of the amount of the subsidy and the loan) in the event of investment plans totaling over €25 million.
- Types of financing through the program:
a) Revolving Working Capital (Credit Line),
b) Stable Working capital,
c) Long Term Investment Loan.
- The loan term cannot exceed the economic and technical life of the investment being financed. The minimum loan term cannot be less than 2 years.
- Loan repayment can be made in quarterly or semi-annual principal instalments with a grace period option of up to two years.
- Interest rate: 3month Euribor.
- Margin: Depending on the credit rating of the beneficiary and the amount of the collateral provided. There is a discount of 25 bps on the applicable interest margin compared with the annual interest rate that would be charged by NBG on a similar loan without EIB participation. In the event that a business fulfils all eligibility criteria for the Jobs for Youth Initiative, an additional discount on the applicable margin is offered*.
- Exemption from the obligation to pay the charge under Law 128/75 (currently 0.60%)*.
In addition to the standard documentation (such as balance sheets, balances, periodic VAT returns, Ε1 tax form of company proprietors etc.):
1. Request for financing, together with a list of any other documents attached, completed and signed by the business.
2. Information regarding staff employed by the firm:
- Detailed IKA Periodic Declarations (DPDs) or
- Solemn declaration of the Legal Representative stating that, during the year the application is filed, the business:
- employs less than 250, in full-time equivalent (if the business has not submitted a DPD) or
- employs minimum 250 and less 3,000, in full-time equivalent (if the business has not submitted DPDs and is classed as a MidCap firm), or
does not employ staff.
3. Shareholder/Corporate structure data:
- For capital companies of "SA", "Ltd", "Private Company" status: copy of the pages of the Book of Proprietors/Shareholders indicating the current Corporate/Shareholder structure as at the date the application is filed or, alternatively, the minutes of the most recent General Meeting of Shareholders, including the names of Shareholders who attended and the proportion of shares or ownership they have in the company.
- For Limited Partnerships and Unlimited General Partnerships: the firm's articles of association and any amendments thereto or any codification thereof with all company changes.
4. IKA DPDs of any associated or affiliated businesses.
5. Declaration stating the firm's size.
6. Declaration certifying the Ultimate Beneficiary.
6. Solemn declaration of the firm's compliance with the eligibility criteria for the Jobs for Youth Initiative, in the event that the applicant business intends to benefit from the additional financial bonus.
7. Business/Investment Plan of the firm
8. In addition, in the case of investment plans (Projects) totaling over €25 million carried out by MidCaps, apart from the above, the following are required:
- Copies of Building Permits.
- Documents related to the relevant tender for the project construction.
- Resolution regarding Approval of Environmental Terms or certificate of exemption issued by the Competent Authority.
Deadline for completion of the program
Until available funds have been used up and no later than 30.11.2018.
For further information, visit any NBG Branch
* The privileged pricing terms apply until 18.07.2019 or for a minimum duration of 2 years as of the date the relevant agreement is signed. After the lapse of such date, the accounts shall be charged with interest at the margin the Bank would charge for the specific loan without EIB's participation.