Innovation Guarantee Fund
The Hellenic Development Bank (HDB) launched early June 2022 the first Innovation Guarantee Fund and for the first time, Greek SMEs, Startups, and Innovative companies benefit from an innovative financing program aiming in strengthening the competitiveness and extroversion of Greek entrepreneurship by supporting the implementation of Research and Development for innovative ideas, products, and practices.
Through this program, available through Greek Financial Institutions, HDB offers to the market a hybrid Loan that combines the provision of a unique combination of loan guarantee and grant of up to 20% of the loan capital, based on the achievement of innovation and ESG criteria (Environmental, Social and Corporate Governance criteria), strengthening innovative entrepreneurship in practice
Who is it for?
Eligible companies are newly established and existing micro, small and medium-sized enterprises (SMEs), according to the EU definition (Annex I of Regulation (EU) No 651/2014)of any legal form, which present an innovative character based on their business plan. The eligibility criteria offer a wide selection opportunity and applicants may also be automatically eligible if they belong to the Government official Innovative companies Registry.
The eligible companies must meet at least one (1) of the Innovation Eligibility Criteria required for participation to the program and must be creditworthy in accordance with the current credit policy and internal procedures of the Credit Institutions and not delinquent to their banking obligations (have no overdue debt repayment of more than 90 days) by the loan application date.
What is the economic advantage for the enterprise?
The guarantee provided by the Hellenic Development Bank (HDB) is 80% on the Innovation Loan amount, thus significantly reducing the credit risk of the Banks. This guarantee is reflected on a lower interest rate the Banks may offer as on any collateral may request from the Innovation Loan applicants.
Advantages:
– lower interest rate,
– less collateral (max. up to 20%) and
– a grant of up to 20% of the loan capital in the form of a loan capital rebate resulting to an automatic reduce of the outstanding loan capital amount to be repaid
What is the budget?
In total, the Credit Institutions will allocate €140.7 million supporting innovative enterprises.
What is the maximum loan amount?
Each eligible enterprise under the De minimis State Aid, may apply for a bank loan from €25,000 to €400,000. The loan should not be used for:
-Refinancing/reimbursement of existing loans or credit lines.
-Funding of dividend payments or stock buybacks.
What is the maximum loan guarantee duration?
The max. loan duration is set up for 10 years, including any grace period, (from 1 to 3 years).
The duration of the loan is up to 10 years including a potential grace period of 1 to 3 years.
What is the guarantee percentage provided by the Hellenic Development Bank?
The Hellenic Development Bank provides an 80% guarantee for each loan.
What is the advantage of the guarantee?
Hellenic Development Bank guarantees the Credit Institutions for 80% of the disbursed capital, allowing Credit Institutions to provide loans on more favorable terms, either by reducing the interest rate or by reducing any hard collateral requirements they may request from the borrower.
What does the additional unique advantage of the grant up to 20% mean?
Eligible enterprises as final recipients can apply for a grant ranging from 15% to 20% of the loan amount when they have successfully completed their investment period. The 15% of the Grant will be secured based on the achievement of specific innovation criteria and the 5% of the Grant will be secured based on the achievement of ESG (Environmental, Social, and Governance) criteria. The Grant will respectively reduce the outstanding loan capital amount.
What is the maximum collateral percentage from the enterprise (Beneficiary)?
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For loan amounts ranging from €25,000 to €50,000, only personal guarantees are accepted.
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For loan amounts exceeding €50,000, additional collateral may be requested, In the case of hard collateral, it shall not exceed 20% of the loan amount, and in any case, the pledging of the permanent and sole residence is prohibited.
What is the guarantee fee?
There is no guarantee fee.
Are there any other expenses?
Credit Institutions who distribute the Innovation Guarantee Fund charge fixed costs for the assessment of loan applications as for the evaluation of eligibility criteria for grants. These costs will not exceed a total of 0.5% of the loan amount and up to €1,200 and vary according to the pricing policy of each Credit Institution.
Is any additional free service provided along with the loan?
Hellenic Development Bank (HDB) offers free service to all SMEs that receive the loan, which is the access to the international digital networking platform “InnoAgora”
“InnoAgora” is an international digital networking platform that facilitates connections between three different groups of participants (companies, investors, and supporting mechanisms), allowing them to engage in investment agreements and commercial collaborations with a strong focus on international expansion and extroversion.
For more information about “InnoAgora”, you can click here.
The collaborating Credit Institutions -banks that distribute the Innovation Guarantee Fund are:
- Piraeus Bank
- Alpha Bank
- Eurobank
- Attica Bank
- Pancreta Cooperative Bank
- Optima Bank
- Cooperative Bank of Chania
- Cooperative Bank of Epirus
- Cooperative Bank of Thessaly
How do I submit a request?
To submit an application, enterprises may apply through the State Aid Information System (PSKE) at the following website: www.ependyseis.gr stating the bank they wish to cooperate with for their financing.
What are the exact criteria for the approval of the grant up to 20%?
The Grant Rate Capital Rebate scheme is calculated upon success in achieving Innovation and ESG criteria in two steps as follows:
First, to qualify for the 15% grant capital rebate, enterprises as final recipients must meet one of the following innovation criteria, and claim it within 36 months from the first loan disbursement re provided that the total loan amount specified in the respective loan Agreement is fully disbursed:
- a) Research and innovation expenditures must be at least 20% of the total operating expenses within the 36 months period from the first loan disbursement.
- b) For start-up businesses having a maximum of three years of operation by the time of signing the loan agreement, the total expenses on research and innovation incurred within the 36 months period from the first loan disbursement are equal or exceed the 20% of the loan capital amount according to the most recent certified financial statements.
Eligibility will be demonstrated through relevant documentation (invoices, E3, Income Statement, and certification by the company’s accountant or certified auditor).
If one of the above conditions leading to a 15% grant is met, the enterprise as final recipient can claim to receive an additional 5% of the total disbursed loan amount as a Grant choosing to comply to at least three out of the following 8 ESG (Environmental / Social / Governance) criteria from at least 2 out of the three following E, S, or G criteria Groups :
E-Reduction of a documented on at least 20% average annual energy consumption EXANTE – EXPOST audit).
E- Increase or maintenance of the percentage use of renewable energy sources to the total energy used, to at least 20% (EXANTE – EXPOST audit).
S-Existence or increase of the women percentage ratio existing in Top Management positions (defined as the top 10% of the salary scale) within company (EXANTE – EXPOST audit).
S-Increase of the average annualized total employee number (EXANTE – EXPOST audit).
S-Increase of the average annual expenditure for staff training (EXANTE – EXPOST audit).
S-Existence of a Customer Satisfaction Policy measurement and its measurement methodology.
G-Existence of corporate governance
G-Existence of data security or personal data protection policies
By receiving the Grant capital rebate, the remaining Innovation Loan capital to be repaid is respectively automatically reduced.
In case that within the 36 month period from the first loan disbursement, the above criteria could not be confirmed and met , and in case the enterprise as the final beneficiary does not submit a Grant claim Request within the prescribed deadline to the Credit Institution , a Grant claim Request with a zero Grant amount is sent by the Credit Institution to HDB hence the Grant is void while the remaining loan amount baring HDB’s guarantee, continues to be repaid by the enterprise until loan expiration.
For the first time in a financing program, the achievement of innovation and ESG criteria is linked to the reduction of the outstanding amount of the loan, offering a significant bonus, especially to entrepreneurs who take the risk to innovate.
For any further queries, please feel free to contact us either by calling at +30 2111058653 or by sending an email at innovation.guarantee@hdb.gr. We are happy to assist with any additional inquiries you may have!
