The Belarusian Ministry of Economy has approved the operational conditions for the distribution of funds that will provide lenders a guarantee for credits given to small and medium sized enterprises (SMEs).
The proposed operational conditions will provide tax exempt status to all funds designated as a loan security for SMEs. The purpose of the proposal is to protect non-profit organisations, legal entities and private individuals who make security loans to SMEs.
The guarantee for SME credit is part of a larger package of policy initiatives aimed at promoting business development in Ukraine.
If the fund meets the following commitments, it will be protected by the guarantor’s rights and qualify for tax exempt status:
- the fund cannot cover more than 70 % of the credit.
- the security does not ensure the return of interest on credit.
- a security should not exceed 30 % of the overall amount the non-profit organisation can spend on guarantee activities.
- the fund can set the amount of the fee charged for the security.
- the fee should be equal to a certain percentage of the security amount.
- the fund should open a deposit with a creditor-bank for the term of the credit agreement.