Posted by: Hidde van Erp Posted on: Tuesday 28 July 2009, 18:26

State launches targeted funds.

A shrinking global market, a propensity to protectionism and the lingering threat of FdI withdrawal is encouraging Hungary to construct a massive financial bulwark against the harmful waves of the global crisis. Among priorities, a welcoming business and industrial environment stands first, so SME suppliers that encourage foreign investors are benefiting from credit programs.

In a Bid to Counterbalance the effects of the global Economics crises, the Hungarian government is launching a HUF 1,400 billion (Eur 4.83 billion), two-year funding package for supporting SMEs. Fresh equity is available under the umbrella of the new Hungary development plan, through various state-owned credit institutions, including credit guarantor Garantiqa Zrt, Hungarian development Bank (mFB Zrt) and venture capital company Hungarian Business Financing Company (mV). more than HUF 560 billion (Eur 1.93 million) has currently been made available to domestic undertakings. Local SMEs can use the new funds to preserve and create new jobs, enhance technical development, as well as to carry out new investments, expansion projects, and to enter foreign markets.

The first installment of the 1,400 billion package is a HUF 300 billion (Eur 1.03 billion) subsidized loan program, which began in January, 2009. Out of the HUF 300 billion, HUF 59 billion (Eur 203.45 million) is available to small enterprises under the new Hungary microloan program for investments and investment-related current assets loans. Companies can take out subsidized investment credit of up to HUF 10 million (Eur 34,500), with a maturity period of a maximum of 10 years. Current asset loans are capped at HUF 6 million (Eur 20,700) for a term of one year. Under the HUF 50 billion (Eur 172.4 million) new hungary investment loan program that is aimed at helping mid-size companies, between HUF 10-100 million (Eur 34,500-345,000) is available in low-interest loans for up to 10 years. The subsidized credit will be channeled to the target sector through local commercial banks. In the meantime, another HUF 160 billion (Eur 551 million) worth of investment and current assets loan packages are waiting for bids from local SMEs, directly from the Hungarian development Bank (mFB Zrt) a giant financial package of HUF 1,800 billion (Eur 6 billion) was also announced on February 10, 2009, by Gordon Bajnai minister of national development and Economy.

The pack is mostly available for the construction industry, as well as infrastructural and regional developments. The total value of the program is available for the next 18 months. In order to secure the repayment of the loans and help more SMEs to qualify for subsidized credit, the government is also in the process of introducing a major state credit guarantee scheme through a state owned loan guarantor, Garantiqa hitelgarancia Zrt. Through Garantiqa hitelgarancia, the government will guarantee up to 80% of HUF 29 billion (Eur 100 million) worth of loans in the new Hungary investment program. The state guarantee applies to loans of up to HUF 100 million (Eur 345,000), with a maturity period of up to 10 years. in order to back the new guarantee scheme, Garantiqa hitelgarancia's guarantee stock was boosted to HUF 900 billion (Eur 3.1 billion) recently.

This guarantee stock can almost entirely cover the HUF 1,400 billion (Eur 4.82 billion) state package. in comparison, Garantiqa hitelgarancia's stock of guarantees totaled HUF 400 billion (Eur 1.38 billion) at the end of last year. The new Hungary Venture Capital program of the Hungarian Business Financing Company (mV), starting in the second quarter of 2009, helps SMEs looking for fresh capital through venture capital investment. Thanks to the program, which was approved by the European Commission in mid-December, SMEs will be able to draw on a cash pool of HUF 35 billion (Eur 120.68 million) mostly from Eu resources.

Within the program's framework, mV will channel funds to SMEs through a number of partnering venture capital funds whose selection process will reach full speed in Q1, 2009. The first fund is expected to kick off by mid-2009. The rich palette of European union tenders serves as another route to financial sources to guarantee the incubation of developing companies and promising projects, as well as to secure the investor friendly climate.....

The rest of this article is available by contacting ITD Hungary. www.itdh.com

Source: HINT Hungary