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Lending is a challenge for the absorption of European funds

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Lending is a challenge for the absorption of European funds

A working group of the Ministry of Energy, Trade and Industry (YEEB) and the country's banking institutions will consider ways to facilitate the coverage through lending of the same participation of companies applying for inclusion in the YEEB sponsorship plans.

The interest of Cypriot companies in joining the existing plans is strong, a sign of the thirst for new investments, but a serious problem has arisen. The projects subsidize 60% of the proposed investment and the remaining 40% must be covered from own resources, either with company capital or by borrowing. Securing pre-approval for a loan has proven to be a challenge, a challenge that jeopardizes the absorption of Community funds to support businesses.

The problem that has been recorded – and discussed extensively in a special workshop on “Financial Opportunities in Business” organized by the YEEB in the framework of the actions of the “Industry Week” – is that investment proposals that meet the criteria for inclusion in sponsorship projects, stumble on get a loan. The proof-coverage of the same participation, however, is a condition for the final approval of the investment proposal and the inclusion in a sponsorship plan.

Bank executives note that the evaluation criteria for joining a sponsorship scheme and for obtaining a loan are not the same, with the bank assessing viability and repayment capacity. The biggest challenge for banks is that they are required to approve a loan to cover the same participation (40% on the investment proposal), without being included in the sponsorship plan. But without the “paper” of the bank there is no possibility of joining the sponsorship plans of YEEB. A solution is therefore sought for this transitional stage, for the “gap” between the submission of the investment proposal and its final approval.

The above problem, as we have mentioned, endangers the absorption (and channeling in the economy) of resources of the current programming period 2021-27 and of the National Recovery Plan that are addressed to the companies. It is estimated that both programs require the mobilization of private resources amounting to € 1 billion. to absorb funds amounting to € 3 billion. (€ 1.8 billion from the THALIA Program of Cohesion Policy and € 1.2 billion by 2026 from the National Plan for Recovery and Sustainability).

“The difficulty of banks in lending the amount that will concern the contribution of companies to the investment, in combination with the lack of alternative forms of financing, jeopardizes the possibility of absorbing these funds from the EU, affecting companies, but also in general the economy of the place “, said in her greeting to the laboratory the Minister of Energy, Trade and Industry Natasa Pileidou.

“Crucial for the successful implementation of the Plans is the role of the competent Implementing Bodies, as well as other key stakeholders, such as the financial institutions that will be called to contribute to ensuring the required participation of the beneficiaries-companies in the Plans”, commented from on his part the general director of the General Directorate of European Programs, Coordination and Development Theodosis Tsiolas.

Source: politis.com.cy

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