Million loans for Lithuanian businesses: find out how to get EIB financing | Business

Although this financing can open up new opportunities for many businesses, not all entrepreneurs know how to get it.

Who is the EIB and what is its mission?

The European Investment Bank (EIB) is a long-term lending institution belonging to the members of the European Union (EU). Its purpose is to finance projects that promote competitiveness, innovation and sustainable development. Although the EIB has been operating in Lithuania for many years – since the accession to the EU in 2004 – for some companies, this financing option may still be new, says Darius Tamašauskas, head of Luminor bank’s business client department.

Company photo/Darius Tamašauskas, Head of Business Clients Department at Luminor Bank

“The EIB pays special attention to regions whose incomes are still below the EU average, so Lithuania is one of the countries whose business can benefit from more favorable conditions. By cooperating with regional banks such as Luminor, the EIB provides financing to local companies, helping them move faster to greener and innovative solutions and increase their competitiveness,” says D. Tamašauskas.

Taking advantage of the opportunities provided by the EIB, projects such as the reconstruction of the Vilnius airport, the construction of the Via Baltica highway, the construction of the liquefied natural gas terminal and others were financed in Lithuania. In 2023 alone, 1 thousand people used financing in Lithuania. small or medium enterprises.

Who can apply for EIB loans?

Luminor Bank, in cooperation with the EIB, offers this financing to small and medium-sized enterprises in Lithuania, Latvia and Estonia. In order to receive a loan, the company must meet certain criteria.

In particular, the number of employees of the company must not exceed 3,000, including employees of affiliated companies. This means that both small and medium-sized enterprises, as well as individual entrepreneurs, can apply for financing if they are registered as legal entities and have the status of a VAT payer.

“EIB financing is available to most sectors, except for companies operating in polluting industries, tobacco, gambling or arms production. Also, the EIB does not finance activities that have a negative impact on the environment, are controversial from an ethical point of view or limit human rights. These exceptions ensure that EIB-financed projects comply with the principles of sustainability and social responsibility, promote a positive impact on society and the environment,” adds D.Tamašauskas.

Where can the funding be used?

EIB loans are extremely flexible, says the Luminor bank representative, so they can be adapted to various projects, especially those aimed at promoting innovation and sustainability.

“Companies can use the funds to purchase low- or zero-emission vehicles, update their production and technological equipment and machines, and implement energy-saving solutions. It is also possible to finance renewable energy projects, such as wind or solar power parks, intended for the production of electricity for the company’s internal needs and for sale to the network,” says D. Tamašauskas.

The proposed financing can also be used for business development. Companies can purchase or renovate tangible assets, buildings or premises, which would be used to carry out the company’s activities or to cover the costs of their construction. When financing investment projects related to the acquisition of buildings or the construction of new ones, up to 10 percent. loans can be used for the purchase of land, which is an integral part of the building.

What are the terms of the loan?

“One of the main advantages of EIB loans is their attractive terms, especially for those businesses that strive for sustainability. Projects that meet the EIB’s green financing criteria are granted a loan with up to 70 basis points lower interest. Other projects are subject to a discount of up to 25 basis points compared to the standard Luminor Bank interest rate,” says the bank’s representative.

Loan amounts range from 10,000 to 12.5 million. euros, so this financing is suitable for both smaller and larger projects. However, the total value of the project for which financing is provided cannot exceed 25 million. euros.

What additional requirements apply to companies?

Along with attractive terms, EIB financing also comes with certain additional obligations. For example, companies that have received financing for the purchase of tangible assets must ensure that these assets are properly maintained, insured and continuously functional throughout the project. This guarantees that the loan funds are used to promote long-term business growth.

In some cases, companies must also allow EIB representatives to inspect project sites to ensure that the loan is being used in accordance with the agreed terms. Such checks ensure transparency and accountability to ensure that funded projects contribute to sustainability and economic development goals.

“For companies looking to grow, innovate or transition to more sustainable solutions, now is the best time to take advantage of EIB financing opportunities.” These loans will help not only to achieve business goals, but also to contribute to the wider aspirations of economic growth and sustainability of the Baltic region”, adds D. Tamašauskas.