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3 Apr 2019

Guarantee fund for Belarusian SMEs now operational

Guarantee fund for Belarusian SMEs now operational

MINSK, 3 April (BelTA) – A guarantee fund for small and medium private companies now works in Belarus, BelTA learned from Piotr Arushanyants, Director General of the Belarusian Fund for the Financial Support of Entrepreneurs, at a press conference on 3 April.

The executive said: “We are starting the implementation of a new mechanism to provide financial support to the private sector in Belarus. We are going to create and develop a guarantee fund to offer collateral on bank loans for small enterprises. This mechanism will operate on the basis of the Belarusian Fund for the Financial Support of Entrepreneurs along with the other tools our fund is implementing in Belarus.”

In his words, attempts were made to introduce such a mechanism in Belarus back in the late 1990s as well as the 2000s. Back then it was an initiative of international organizations, commercial banks, and other institutions, but it was not implemented in the end.

“The mechanism is now fully operational. In March we made all the final decisions to pass local enactments and signed agreements with the banks, through which this mechanism will be implemented,” Piotr Arushanyants noted. For now those are Dabrabyt Bank, VTB Bank (Belarus), and Belagroprombank, however, the fund is ready to work with any banks that meet certain criteria.

There are plans to issue the first guarantees this month. The guarantees will be provided on bank loans and leasing contracts. Guarantees will be provided on principal sums for now. The fund’s guarantees will not be available for interest rate payments and fines, specified Pavel Gorbach, First Deputy Director General of the Belarusian Fund for the Financial Support of Entrepreneurs. “We can provide guarantees to the tune of up to Br120,000. The guarantees will be able to cover up to 60% of the debt in a credit contract or the contract value in a leasing contract,” he added.

Bearing in mind the current economic parameters of the fund, plans have been made to provide guarantees to the tune of up to Br12 million within one year. “Since we are going to provide guarantees to cover 60% of the principal sum, banks will be able to give loans or sign leasing contracts to the tune of up to roughly Br20 million,” Pavel Gorbach noted.

The guarantee fund will charge a commission fee of 1.25% of the guaranteed sum.

Asked about preferred beneficiaries of the guarantees, Pavel Gorbach stressed: “We haven’t singled out some specific industries or types of business we are going to prioritize. Everyone will have an opportunity to use this instrument. There is one thing to remember: we’ve barred gambling business, leasing companies, insurance companies, and banks.”

The fund is now considering giving guarantees on loans granted by commercial banks out of resources of the Development Bank of the Republic of Belarus (DBRB). A decision has yet to be made on foreign currency loans.

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