ECONOMIC RECOVERY PACKAGE

ECONOMIC RECOVERY PACKAGE

Like in every country in the world, as well as in our country, the COVID-19 pandemic has had a negative impact on the country’s economy, causing a decrease in the liquidity of Small, Medium and Micro Enterprises (SMEs) despite the activity. Of course, this has first affected activities which due to the pandemic have been forced to work at reduced capacity or shut down altogether.

In response to the pandemic situation from COVID-19, the Government of Kosovo (GoK) has approved the Economic Recovery Package, one of the measures of which is to ensure financial liquidity through the guarantee scheme of the Kosovo Credit Guarantee Fund (KCGF).

Such a measure will play an important role in the recovery of our country’s economy.

Restoring confidence in the banking sector in order to avoid the credit crunch that would subsequently lead to a lack of liquidity in the market has been identified as one of the fronts that KCGF would have to fight, during and after the COVID crisis.

 

PURPOSE OF RECOVERY PACKAGE WINDOWS

  • Access to finance for enterprises affected by the crisis as well as enterprises of strategic importance for the economy of the Republic of Kosovo.
  • Increased liquidity for MSMEs.

FINAL BENEFICIARIES

Addressing the Economic Recovery Package is done through the creation of guarantee windows for certain sectors and segments affected by the crisis caused by COVID-19.

The guarantee windows within this Package are expected to support access to finance for MSMEs related to:

  1. Production
  2. Agribusinesses
  3. Service
  4. Trade
  5. Women in business
  6. Start up

Start-Up Window

 

 

PURPOSE OF RECOVERY PACKAGE WINDOWS

  • Access to finance for new enterprises – Startup’s;
  • Continuity of Investments;
  • Business continuity;
  • Increased liquidity for the targeted MSMEs.

INTERMEDIARIES

KCGF‘s Financial Partner Institutions such as: Banka Ekonomike Sh.A., Banka Kombëtare Tregtare, Banka për Biznes Sh.A., NLB Banka Sh.A., ProCredit Bank Kosovo J.S.C., TEB Sh.A.

WHICH BUSINESSES QUALIFY?

Parameters for MSMEs that qualify for collateral financing include, but are not limited to the following:

  • Private-owned MSMEs mainly engaged in activities / economic sectors that require basic knowledge *;
  • Businesses with maximum experience up to 12 months from opening the business;
  • Businesses registered with KBRA;

FEATURES, WHICH LOANS CAN BENEFIT FROM ERP?

Eligible loans that meet the following criteria will be eligible for the Startup window benefits:

  • The maximum loan amount is 50,000EUR;
  • The maximum amount of the guarantee is 40,000EUR;
  • Maximum repayment period of the guaranteed loan up to 60 months;
  • The purpose of the loan can be for long-term investments as well as for working capital.

WHAT ARE THE GUARANTEE FEATURES?

  • Guarantees will be provided for the amount of up to 80% of the loan principal.
  • The maximum loss cap will be 50%;
  • Type of guarantee: One use;
  • Inclusion period: Until December 31, 2021

WHAT IS THE APPLICATION AND DECISION-MAKING PROCESS

The potential borrower (MSME) does not apply for a guarantee but applies for a loan at one of the KCGF Financial Partner Institutions (see response to Intermediary item).

The Financial Partner Institution after performing the usual credit analysis by applying the approval standards and if the company meets the KCGF criteria then the relevant Financial Institution itself will place the loan under the KCGF credit guarantee.

INTERMEDIARIES

KCGF‘s Financial Partner Institutions such as: Banka Ekonomike Sh.A., Banka Kombëtare Tregtare, Banka për Biznes Sh.A., NLB Banka Sh.A., ProCredit Bank Kosovo JSC, Raiffeisen Bank Kosovo JSC, TEB Sh.A. ., and Raiffeisen Leasing Kosovo.

For more:  https://fondikgk.org/en/partner-financial-institutions/

 

WHICH BUSINESSES QUALIFY?

Parameters for MSMEs that qualify for collateral financing include, but are not limited to the following:

  • Private-owned MSMEs, without any Government ownership during the guarantee coverage period;
  • MSMEs that have business registration and fiscal numbers;
  • Farmers with Farmer Identification Number;
  • A qualified borrower must be at least fifty percent (50%) owned by private citizens or permanent residents of Kosovo;
  • MSMEs with less than 250 employees;
  • MSMEs that have proven positive credit history (Classification – Standard A);
  • MSMEs that had good financial performance before the pandemic.

 

FEATURES, WHICH LOANS CAN BENEFIT FROM ERP?

Eligible loans that meet the following criteria will be eligible for ERP benefits:

  • The maximum loan amount is EUR 1,000,000;
  • The maximum amount of the guarantee is 250,000 EUR – 500,000EUR *;
  • Maximum repayment period of the guaranteed loan up to 84 months;
  • The purpose of the loan can be for long-term investments as well as for working capital.

* the maximum amount of the guarantee for the production sector is up to 500,000EUR

 

WHAT ARE THE GUARANTEE FEATURES?

  • Guarantees will be provided for the amount of up to 80% of the loan principal. Increase of the guarantee percentage from 50% to 80%;
  • The maximum loss cap will be 30%;
  • Type of guarantee: One use;
  • Inclusion period: One year (until December 31, 2021)

 

 WHAT ARE THE BENEFITS?

For MSME’s

  • Increased access to finance
  • Potentially preferential interest rates
  • Collateral reduction
  • Faster processing time for loan applications
  • Business Sustainability – Second Chance

For Partner Financial Institutions

  • Credit risk reduction
  • Cost risk reduction
  • Capital relief
  • Credit portfolio growth

 

WHAT IS THE APPLICATION AND DECISION-MAKING PROCESS

The potential borrower (MSME) does not apply for a guarantee but applies for a loan at one of the KCGF Financial Partner Institutions (see response to Intermediary item).

The Financial Partner Institution after performing the usual credit analysis by applying the approval standards and if the company meets the KCGF criteria then the relevant Financial Institution itself will place the loan under the KCGF credit guarantee..

FREQUENTLY ASKED QUESTIONS

Given the large number of questions we may have, we have compiled a list of common questions that can be found here https://fondikgk.org/en/frequent-asked-questions/

 

LAW 07_L-016 ON ECONOMIC RECOVERY – COVID -19

Approved Law you can find it by clicking the link here: Law 07_L-016 on Economic Recovery

 

RESULTS BY 31 OCTOBER  2021

 

Windows within the Economic Recovery Package (ERP) Number Loan Amount Guarantee Amount Average Loan Amount Average Guarantee Amount
Total ERP 1,377 71,021,585 64,041,844 51,577 46,508
Women in Business Window 195 7,946,215 7,252,919 40,750 37,194
Agro Window 119 5,409,700 5,025,167 45,460 42,228
Manufacturing Window 250 17,910,274 16,143,139 71,641 64,573
Service Window 394 17,860,520 16,866,047 45,331 42,807
Trade Window 411 21,778,876 18,665,773 52,990 45,416
Startup Window 8 116,000 88,800 14,500 11,100