Government to guarantee the loans of local companies

Companies hit by the economic crisis may secure state guarantees worth €90 percent of the funds borrowed from banks, as part of a program which received the green light yesterday from the European Commission.

This is one of the first precise measures aimed at helping local companies. Managers and owners of businesses operating in Romania say that this is a good program, but that the government is moving too slowly to counter the impact of the crisis.

"We will access such stimulus, it is beneficial because if such guarantees are available this means that interest rates will be lower. We need such funds because we are making investments which require financing," the General Manager of Doosan-IMGB equipment producer, Florin Antonescu, said. "This measure comes rather late for large companies, which have made investment plans as far back as the beginning of the year. However, small and medium-sized companies will find this measure advantageous. It should have been passed earlier," Antonescu added.

Companies interested in the guarantee must apply to state-owned Eximbank lender, which has some €5 million available for the first two years of this program. However the amount could be increased to some €1.5 billion. With these existing funds, Eximbank estimates it is to grant letters of guarantee for 180 companies, which can thus obtain better lending conditions from commercial banks.

In order to qualify for this project, companies must prove that they had a good situation prior to 1 July 2008, when the crisis started affecting Romania. However, the government is yet to set the evaluation criteria to determine eligible companies. The guaranteed loan must not be higher than the 2008 salary fund.

Business Standard