NATIONAL LOAN GUARANTEE FUND FOR SMEs

1

• NATIONAL LOAN GUARANTEE FUND FOR SMEs
• GUARANTEES OF NLGFSME A WAY FOR FACILITATING
  THE ACCESS OF SMEs TO FINANCING
• International Forum for Investments
• Bucharest, October 14th, 2004

2
GENERAL DATA

• NLGFSMEs is a financial institution dedicated to
  SMEs
• It operates since April 2002
• The Fund is a joint stock company fully owned by
  state, which is represented by National Agency
  for SMEs and Cooperatives
• The current shareholders' equity is of about 13.5
  million Euro. The state will increase its
  contribution to the share equity to about 40
  million Euro until 2006
• NLGFSME has a number of 13 territorial offices
  and co-operates with 15 commercial banks.

3
MISSION AND OBJECTIVES

• NLGFSME is an instrument of the Government for
  the implementation of its policies focused on the
  development of SME sector
• The mission of the NLGFSME is to grant guarantees
  for financial instruments taken by SMEs from
  commercial banks or from other sources authorized
  by law
• The objectives are to facilitate the access of
  SMEs to financing and to increase the volume of
  investments made by SMEs in productive sectors.

4
GUARANTEED FINANCIAL INSTRUMENTS

• The Fund guarantees
• Long and medium term loans for investments
• Short term loans (for financing working
  capital needs)
• Bank letters of guarantee (i.e. as a
  guarantee for participating to tenders, for
  payments in advance etc.)
• Leasing contracts.
• NLGFSME guarantees loans in Romanian currency
  (ROL), as well as in foreign currencies.

5
GUARANTEEING CONDITIONS

• Eligible beneficiaries are only SMEs that fulfill
  the conditions of Law no. 346/2004, defined as
• 1. Legal persons
• Having up to 250 employees
• Having an annual turnover of up to 8 million
  EURO
• Independent of large companies (they have not
  as a shareholder or associate a legal person
  or a group of legal persons that holds more
  than 25 of the share capital of the SMEs
  and is not included in the SMEs category).
• Fully privately owned.
• 2. Self-employed persons (including family
  associations).
• 3. Cooperative societies.

6
GUARANTEEING CONDITIONS

• Credit approved by the bank
• Participation of the SME with own resources to
  the investment that is to be financed
• Good management Credit worthiness of the SME
  
• Collateral of SME shall be constituted in
  compliance with the rules of each commercial
  bank
• Have not unpaid debts to state budgets
• Dont ask for financing in order to refinance
  their previous loans.

7
GUARANTEE PRODUCTS

• Guarantees for existing SMEs
• Cover up to 75 of the value of medium and
  long term credits, but no more than 500,000
  Euro
• Cover up to 60 of the value of short term
  credits, but no more than 400,000 Euro
• Commissions Annual premium of 1.5 (for short
  term credits) and between 1.6-3.5 (for medium
  and long term credits) of the outstanding
  guarantee.

8
GUARANTEE PRODUCTS

• Guarantees for start-ups
• Cover up to 80 of the value of medium and
  long term credits, but no more than 500,000
  Euro
• Cover up to 70 of the value of short term
  credits, but no more than 400,000 Euro
• Commissions Annual premium of 1.5 (for short
  term credits) and between 1.6-3.5 (for medium
  and long term credits) of the outstanding
  guarantee.

9
GUARANTEE PRODUCTS

• Guarantees for self-employed persons
• Cover up to 75 of the value of medium and
  long term credits, but no more than 75,000
  Euro
• Cover up to 60 of the value of short term
  credits, but no more than 75,000 Euro
• Commissions Annual premium of 1.5 (for short
  term credits) and between 1.6-3.5 (for medium
  and long term credits) of the outstanding
  guarantee.

10
NECESSARY STEPS FOR GETTING THE GUARANTEE

• The SME submits loan documents to financing bank.
• If Bank, as a result of analyzing loan documents,
  considers that the project is viable, but the SME
  has not enough collaterals, it requests to the
  Fund to share the risk by issuing a financial
  guarantee for that commitment.
• If the Fund, based on its own analysis, agrees to
  guarantee the credit, the Bank and the Fund sign
  a guarantee contract.
• Bank signs the loan contract with SME.

11
GUARANTEE PAYMENT PROCEDURE

• If the credit contract is forfeited by the Bank,
  the Bank turns simultaneously to the SME for
  selling its collaterals, and to the Fund with a
  payment request.
• At the first request of the Bank, the Fund pays
  50 75 100 of guarantee amount and in the
  same time it subrogates in the rights of the bank
  on SMEs collaterals.
• Between the Bank and the Fund takes place the
  regularization of payment differences.
• After the regularization between the Bank and the
  Fund, if the Fund has a damage, it has the right
  to turn against SME through a complaint addressed
  to the court. In this case, the Fund recovers its
  debts, according to the law, selling SMEs goods,
  other than those that were used as collaterals by
  SME.

12
NLGFSME STATISTICSAugust 1, 2002 June 30, 2004

• Total volume of credits which were guaranteed
  over 35 million Euro
• Value of issued guarantees 15 million Euro
• The average time for analyzing and approving a
  guarantee was of 9 days.

13
NLGFSME STATISTICS August 1, 2002 June 30, 2004

• Distribution of the volume of granted guarantees
  by sectors of activity
• Industry 53.37
• Construction 23.15
• Services 9.59
• Agriculture 7.71
• Transportation 6.18

14
CONTACT

• National Loan Guarantee Fund for SMEs
• Address 155 Calea Victoriei, 6th floor
• Bucharest, Romania
• Phone [phone]
• Fax [phone]
• office_at_fngcimm.ro
• www.fngcimm.ro