The European Bank for Reconstruction and Development (EBRD) announced on 21 December that it is extending a €5 million loan to Budapest Lizing, a subsidiary of GE Money's Hungarian bank Budapest Bank.
„The loan will be used to finance leases up to €125,000 to farmers and small enterprises in rural areas of Hungary,” the European Bank for Reconstruction and Development said in a statement. The funding is provided under the rural sub-window of EU/EBRD SME Finance Facility, which will be complemented by a grant of up to €500,000 from the European Commission for performance-based financial incentives. „This rural facility will help the company approach even smaller enterprises than it did before and reach out to more rural businesses,” commented Balázs Báti, the Managing Director of Budapest Lizing (BL).
BL has participated in the finance facility since 2003, with over 2,700 leases extended to SMEs, of which almost 2,000 are micro-leases (less than €30,000). Through its regional presence, BL is well positioned to expand into the rural segment of the leasing market. Báti also stressed that by taking this credit line, BL becomes the largest borrower under the finance facility in Hungary, which enables it to extend sub-loans to SMEs to the value of €30 million. Francois Lecavalier, EBRD Director for Hungary, the Czech Republic, Slovakia and Slovenia, said this loan will help BL further enter rural areas, which are traditionally less developed, and to reach out to farmers and rural enterprises which for years have not been eligible for lease financing.
The transaction is expected to lead to increased competition in the Hungarian rural finance sector as other financial intermediaries recognize the potential of this underserved market. The EU/EBRD SME Finance Facility, a joint program of the European Commission and the EBRD, supports the development and growth of entrepreneurs by facilitating their access to finance. Under this regional project covering 11 countries, the bank will make available funding of €1.35 billion, of which €1.07 billion has been committed in signed projects to date. (Interfax, Capital Communications)