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Portfolio guarantees within Fund of Funds
Published on 21 October 2020

Slovenia
This is the good practice's implementation level. It can be national, regional or local.
About this good practice
SID Bank as a guarantee instrument within Fund of Funds introduces unconditional portfolio guarantees in the amount of the total guarantee quota of 61,9 mio EUR that have been made available to the chosen commercial bank and savings institutions (Nova Ljubljanska banka, Delavska hranilnica and Primorska hranilnica Vipava) for financing of sole proprietors, SMEs, cooperatives and institutions. These final beneficiaries will be able to improve their access to funding through participating financial institutions by loans in the amount from 30.000 EUR to 10 mio EUR. Thus they can benefit from more favorable loan conditions, since SID Bank, as the financial intermediary of the guarantee financial instrument, will assure the partial coverage of loss (62,5 %) for credits to eligible final beneficiaries, which will favorably affect the level of interest rates and particularly the value of collateral demanded by the financial institutions.
Selected financial institutions will be able to use the portfolio guarantees only for loans that will be approved for financing operating expenses or investments (to reinforce company's activities, to implement new projects, market breakthrough or achievements that contribute to improving the competitiveness of company or creating or maintain the permanent jobs). Within the agreements with the selected financial institutions, milestones for placements of loans to final recipients are defined along with other mutual commitments and obligations.
Selected financial institutions will be able to use the portfolio guarantees only for loans that will be approved for financing operating expenses or investments (to reinforce company's activities, to implement new projects, market breakthrough or achievements that contribute to improving the competitiveness of company or creating or maintain the permanent jobs). Within the agreements with the selected financial institutions, milestones for placements of loans to final recipients are defined along with other mutual commitments and obligations.
Resources needed
The total available amount of portfolio guarantees is 61,9 mio EUR, providing coverage for almost 100 mio EUR of loans. Guarantees are coved by ERDF sources.
Evidence of success
Immediately after launching the financial instrument, the first agreement between the bank and the company in the amount of 50.000 EUR was concluded, proving the need for such financial instrument.
Potential for learning or transfer
This financial instrument has proven to be useful due to its favorable conditions vis-à-vis commercial banks (guarantee fulfils the conditions for according to CRR) and final recipients (free of charge, high coverage). Having commercial banks involved in this types of financial instruments, we can improve the access to portfolio guarantees for SMEs and solo proprietors, since we have found that there is a need for such financing.
Further information
Website
Good practice owner
You can contact the good practice owner below for more detailed information.
Organisation
Government Office for Development and European Cohesion Policy

Slovenia
Zahodna Slovenija
Contact
Undersecretary / Project officer