PayRay Bank gets EU-backing to expand access to finance for Lithuanian SMEs


2021 04 06

  • Lithuanian bank PayRay Bank signs guarantee agreements with European Investment Fund under the “European Guarantee Fund” (EGF), to channel financing to hard-pressed SMEs.
  • The guarantees are set to support a portfolio for a combined value of up to €50 million in new financing to small and medium-sized Lithuanian businesses.
  • The EGF is part of the €540 billion EU rescue package in the wake of the COVID-pandemic.

In order to support small and medium sized businesses in Lithuania, who are under strain from the COVID-pandemic, Lithuanian financial intermediary PayRay Bank has signed two guarantee agreements with the European Investment Fund. The two guarantees are made available under the European Guarantee Fund, an initiative of the EIB Group and EU Members States. In total, the operation will guarantee a portfolio of new SME financing by PayRay Bank for a maximum of €50 million.

Renato La Fianza, Director of PayRay Bank, commented: “The signed agreement opens new opportunities for Lithuanian companies, which until now were not able to benefit from the support, and thus strengthen the competitiveness of business. The EGF guarantee can cover a wide range of financing products: investment and working capital loans, factoring (account financing) and leasing, giving companies the flexibility to receive the support that best suits their needs and creates the most benefits. The measure also has fewer sectoral restrictions and the guarantee provides lower requirements for pledges. It is also important that not only a fast process of obtaining financing is planned, but also more favourable pricing due to the applicable guarantee.”

Alain Godard, Chief Executive of the EIF, added: “SMEs are under a lot of pressure throughout Europe. That’s why the EIB Group set up the European Guarantee Fund together with Member States, to quickly make available as much financing as possible for SMEs, who are the engines of our economies. We’re glad to partner with PayRay to bring EU-financing to final beneficiaries, showing that European financing can really make a difference.”

Vaida Česnulevičiūtė, Vice-Minister of Finance of the Republic of Lithuania, said: “We appreciate the confidence expressed by the European Investment Fund in the competencies and modern tools of Lithuanian companies in providing financial services. In the current context of economic uncertainty and ongoing quarantine across Europe, additional financing sources for small and medium-sized enterprises are vital. PayRay's leadership has led to the administration of a €50 million aid fund to help businesses recover from shocks and save jobs”.

Technically speaking, PayRay Bank has signed two guarantee agreements, one capped and one uncapped, to provide debt financing to SMEs on more favourable terms, ensuring that companies in have sufficient financing to mitigate the economic impacts of the COVID-19 crisis. Coming out of the current crisis, this will help Lithuanian SMEs to continue their growth and development in the medium to long-term.

The maximum loan amount guaranteed by the EGF is EUR 6 million. It is granted for a period between 3 months and 10 years. Lithuanian companies with up to 499 employees will be able to use portfolio guarantees issued by the EGF with immediate effect.

Background information:

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from Lithuania and other EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly €25 billion in guarantees, the EGF allows the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity and other financial instruments available to mostly small and medium-sized enterprises. The EGF is part of the European Union’s recovery package aiming to provide a total of €540 billion to boost those parts of the EU economy that have been hit the worst.

PayRay Bank is a neobank that provides financing services to businesses and accepts deposits from natural persons. The company provides business financing services in Lithuania and Latvia, and accepts deposits in Lithuania and Germany through the platform. In the first quarter of 2021, PayRay Bank’s credit portfolio, which includes corporate loans and factoring, has already exceeded EUR 52 million. The company currently provides financing services to more than 300 companies operating in different sectors. PayRay Bank has a share capital of EUR 36.4 million