The line of credit for banks shall be in the total amount of 1.2 billion kroons, of which 400 million kroons will come from the European Regional Development Fund and 800 million kroons in the form of borrowing from the Estonian state.

The line of credit offered by KredEx enables the banks to obtain resources more favorably and borrow them further to enterprises on reasonable conditions, when the state resource (0% interest) in combination with favorable foreign financing can bring the weighted average interest lower than the best interest offered in the market under normal circumstances.  In comparison with the previously issued project-specific loan resources, upon line of credit, the banks receive the loan resource as a single limit.

 

The terms of the loans that are offered through the co-operation between KredEx and the banks are similar to regular bank loans, except for the fact that a long loan-period is possible (2 to 10 years). The maximum amount of loan is 30 million kroons per enterprise. The target group of the loan is formed by exporting enterprises being active at least 3 years. Loan applicants should have recourse to bank offices and shall undergo the regular credit eligibility check.

 

According to Mr Andrus Treier, the KredEx CEO, it would be the last part of the support package approved by the Estonian Government this spring, under which 251 enterprises with 18,000 employees and generating 4 billion kroons export turnover have already been supported.

„The support via line of credit is real – even an interest rate slightly lower can bring along the annual saving on costs for more than half a million kroons, and the availability of long-term financing will result in bigger confidence in activity planning,“ Mr Andrus Treier said.

 

In spring 2009, a state support package was developed by the Estonian Ministry of Economic Affairs and Communications and KredEx with the objective to improve the loan capital availability using the support from European structural funds. Among other things, the maximum rate of the KredEx loan guarantee portfolio was increased from 800 million kroons up to 1.5 billion kroons, the maximum guarantee per enterprise was increased up to 30 million kroons and the size restriction for enterprises was abolished, enabling to issue guarantees to bigger enterprises as well.

 

Within the framework of the support package, subordinated loans with result-based interest were initiated in April; as of the beginning of December, 125.5 million kroons have been issued (15 agreements). In addition to subordinated result-based loans, KredEx has been offering (since 2006), at the cost of existing funds, subordinated loans with fixed interest (capital loan), which, during the 11 months of 2009, have been issued to 12 enterprises in the amount of 84.5 million kroons.

Since May 18, 2009, KredEx has been offering (together with banks) loan resources aimed at exporting enterprises with the objective to allow long-term financing with favorable interest for enterprises with essential influence to Estonian economy. Until the end of 2009, the so-called project-specific resource was offered, used by 13 enterprises in the amount of 270 million kroons so far.

As the last part of the state support package, KredEx offers a credit with more favorable interest to banks for further borrowing to enterprises for 1.2 billion kroons. This resource will be open to the enterprises in January 2010, after entering into respective agreements with banks.