Juncker Plan in Lithuania: Vilnius Factoring Company to issue €10 million in new microloans with EIF support

Vilnius Factoring Company, a private lending company in Lithuania, has signed a cooperation agreement with the European Investment Fund (EIF) to issue microloans of up to €25,000. Micro-enterprises and farmers in Lithuania can now benefit from non-banking business funding opportunities under the EU Programme for Employment and Social Innovation (EaSI). The company is issuing microloans up to a total of €10 million with a guarantee from the EIF. The agreement is backed by the Juncker Plan’s European Fund for Strategic Investments, which allows the European Investment Bank Group to invest in higher-risk operations.

The aim of the EaSI programme is to provide micro businesses with better access to finance. More specifically, conditions to gain access to such financing are less stringent than access to finance from traditional banking sources, also thanks to significantly lower collateral requirements. The funds can be invested in either the company’s working capital or its business development.

Marianne Thyssen, European Commissioner for Employment, Social Affairs, Skills and Labour Mobility, said: “Thanks to this financial support from the EU, more micro-entrepreneurs in Lithuania will gain access to finance. This will allow them to start up or develop their business, creating more jobs and opportunities at grassroots level. I warmly welcome this agreement which, once again, shows that, through our programme for employment and social innovation, the EU can take concrete action to tackle financial and social exclusion. This agreement brings us one step closer to building a fairer and more social Europe.”

Having operated in Lithuania for one year, we noticed an obvious need for flexible financing instruments among micro businesses that could be provided not only by enterprises within the banking sector. It is very important for trusted partners like the EIF to allow us to expand the financing instrument packages available for micro businesses and farmers,” said Renato La Fianza, CEO of the Vilnius Factoring Company.

According to La Fianza: “Favourable financing conditions and the possibility to use funds for development allow micro businesses to harness their market opportunities more rapidly, and to develop and to implement new solutions while efficiently managing the risks.”

Microloans will be provided to small farmers and enterprises with no more than 9 employees. The annual turnover and the amount of assets these enterprises carry should not exceed €2 million.

Chief Executive Pier Luigi Gilibert of the European Investment Fund stated: “We’re happy to be able to support such a young company with its growth plans, helping it to scale up its micro lending. Access to finance is an issue around Europe and the presence of initiatives like this one significantly help to alleviate the situation.

To date, the Vilnius Factoring Company has been providing factoring services to micro, small and medium-sized businesses. Within one year of its operations in Lithuania, the company has financed invoices valued at €113 million and has provided services to 130 clients. At the middle of August, Vilnius Factoring Company had a financing portfolio of €23 million.

The EU Programme for Employment and Social Innovation (“EaSI”) aims to support the EU’s objective of high level employment, adequate social protection, fighting against social exclusion and poverty and improving working conditions. The microfinance and social entrepreneurship axis of the EaSI programme provides support to financial intermediaries that offer microloans to entrepreneurs or finance to social enterprises. The objective is to increase access to microfinance, which includes microcredit i.e. loans of up to €25,000, in particular for vulnerable persons and micro-enterprises.

The European Investment Fund (EIF) is a financing institution that is part of the EIB (European Investment Bank) Group. Its main remit is to support micro, small and medium-sized enterprises (SMEs) in Europe, facilitating their access to credit. The EIF defines and develops equity instruments, guarantees and microcredit facilities tailored to the needs of this category of enterprises. In carrying out this role, the EIF is pursuing the EU’s objectives of innovation, research and development, entrepreneurship, growth and employment.

The European Fund for Strategic Investments is the main pillar of the Investment Plan for Europe, known as the Juncker Plan. Its support increases the EIB Group’s capacity to finance investment projects that, in line with the Juncker Plan’s criteria, fosters the EU competitiveness and create new jobs. The EFSI provides first loss guarantees, enabling the EIB to invest in more projects that often come with greater risks. The projects and agreements approved for financing under EFSI are expected to mobilise €424 billion in investments. The Plan is currently supporting 967,000 SMEs in the 28 Member States. More information on the results of the Investment Plan for Europe is available here.

Vilnius Factoring Company is a non-banking financing solutions company that combines foreign investment with the expertise of local professionals. The company offers solutions to finance working capital and business development. It employs 21 financial sector experts. Vilnius factoring company started operations in Lithuania in June, 2018.