MIL OSI Translation. Region: Russian Federation –
January 20, 2022, 07:03
The bulk of surety agreements were concluded with trading companies.
The Moscow Small Business Lending Assistance Fund concluded 977 surety agreements in the amount of 15.4 billion rubles. In 2021, entrepreneurs received 32.8 billion rubles from creditors.
In terms of guarantees, the growth was 47 percent compared to 2020 and increased by 22 percent compared to 2019. The number of contracts increased by 71 percent compared to 2020 and by 38 percent compared to 2019.
“The growth in guarantee support figures is certainly interconnected with the trends in the SME lending market, including the continued high demand for new secured loans, spurred on by the recovery in business activity. An important growth driver was the soft lending programs launched at the federal and city levels. Thus, out of 32.8 billion rubles attracted by entrepreneurs in 2021 with the support of the fund, more than 29 percent had a low interest rate through subsidies from the Moscow Government and another 12 percent through preferential federal programs. It is important that 88 percent of the fund’s borrowers are really micro-enterprises and small enterprises, and 12 percent are representatives of medium-sized businesses,” said the head
The country’s largest banks play the main role in lending to small and medium-sized businesses and in cooperation with state programs. The average size of the Guarantee Fund guarantee is approximately 20 million rubles, the maximum is 100 million rubles. The fund covers up to 70 percent of the loan, the remaining part the entrepreneur must provide on his own.
The sectoral structure of borrowers who have taken advantage of the guarantee corresponds to the sectoral structure of small businesses in Moscow. The bulk of surety agreements were concluded with trading companies (59 percent). The share of manufacturing and innovative companies accounts for 17 percent of contracts, construction organizations – five percent. Eight percent of surety agreements were signed in priority sectors (health care, transport, communications, medicine), the remaining 11 percent were concluded with enterprises providing various services.
Basically, entrepreneurs use loans to replenish working capital (79 percent), fulfill contracts (10 percent), invest (seven percent) and restructure existing debt (four percent).
The guarantee of the fund not only makes the loan more accessible, but also positively influences the bank’s decision on the loan term. Thus, 63 percent of guarantees are issued for medium-term loans for a period of one to three years, 19 percent for long-term loans (over three years), and 18 percent for short-term loans.
“Today, Moscow offers a wide range of concessional financing programs that complement each other and can be used in parallel. In December, a program for lending to start-up entrepreneurs was launched, where the fund will cover 70 percent with a guarantee, and the rest with a subsidy from Moscow. There is also subsidiary support,” Alexey Fursin added.
Moscow Small Business Lending Assistance Fund (Moscow Guarantee Fund) subordinated to the Moscow Department of Entrepreneurship and Innovative Development. The Fund acts as a guarantor for loans, guarantees, loans, leasing, factoring, letters of credit. The guarantee covers up to 70 percent, but not more than 100 million rubles, the guarantee rate is from 0.5 percent per annum. Guarantees can be applied directly to fund, across partner banks and business service centers.
EDITOR’S NOTE: This article is a translation. Apologies should the grammar and or sentence structure not be perfect.