Good practice:

EDIOP 8.3.1.-16 Programme to increase the competitiveness of SMEs

The programme is launched as part of the Economic Development and Innovation Operational Programme of Hungary (EDIOP), under Priority Axis 8 Financial Instruments. The programme is the most popular loaning scheme of the priority aims to increase the competitiveness of SMEs through gaining better access to finance of the SMEs which are not or hardly capable to reach external financial support.
The total sum of the loan could be between 1 and 600 million HUF (3200 and 2 million EUR). The required own capital is 10% (in case of purchasing vehicles 20%). The project needs to be completed within 24 months.
Repayment term is maximum 15 years, with no interest rate, no handling fees and equal instalments every month.
Eligible activities supported by the programme: purchasing fixed assets, even used, construction (or renovation, expansion, reorganisation) of building, procurement of real estates. The investments need to be financially viable, and profitable.
Managing Authority of the call for proposals (and of EDIOP) is the Ministry for National Economy, but the network of banks are managed by an intermediary organization (fund of funds), which is the Hungarian Development Bank. In this system, all of the loan, combined and equity type of products offered within EDIOP can be sold by all of the network members, called MFB access points.

The total amount of the programme for loan is 44 billion HUF (142 Million EUR)

The programme is considered as very popular, the total of applications had already overrun the previously planned amount. Altogether 1,809 applications were submitted, out of which 1200 have been approved. The final number of contracts is 1,029, which covers approximately 176 million euros.

A free of charge loan for entrepreneurs had not been available before. Moreover, the connected costs are also offered free of charge, so the overall possibility for the entrepreneurs (despite of the obligatory 10% own capital what is required) to get the whole sum without any additional cost. The amount is relatively high, and could be a very important starting point for starters and restarters (especially because of the supported activities e.g. building, immaterial investments and vehicles even second hand ones). The relatively long repayment period of the loan is also attractive (15 years for buildings and reconstructions, 5 years for immaterial according to the depreciation periods). The solution is aimed to give opportunity to entrepreneurs who does not have, or have very limited access to financial resources of their own from the market, giving also the possibility to second-chance entrepreneurs to gain access to financing.