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MFB to offer preferential loans to former state workers from November

The Hungarian Development Bank (MFB) Zrt will start offering preferential loans to public sector workers laid off as a result of government austerity measures from November 6, deputy CEO Sándor Aladics said in Tuesday's issue of business daily Világgazdaság.

The loans are intended to help the laid-off workers set up their own businesses. The government is scheduled to discuss the planned credit construction this week, Aladics said. The government promised in September to make Ft 20 billion in preferential credit available to public sector employees or workers at state-owned companies who have lost their jobs. The loans were to be available for up to Ft 3 million until the end of 2008. Aladics said the loans will not require any self-financing by the borrower, and will carry a 100% state guarantee. According to plans, the loans' run will be for 10 years with a three-year grace period. They will carry a rate of at most 2.5% over the three-month Euribor, or about 6% at present.
The loans will be available at a number of commercial banks with which MFB has contracts. MFB expects the laid-off workers to take out Ft 2 million-Ft 2.5 million apiece, enough to cover the start-up costs of a small business, meaning the scheme will assist as many as 8,000-10,000 former state employees.