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Credit Line with Mutual Guarantee, IFD 2016-2020 (Azores)

There is a new Credit Line with Mutual Guarantee IFD 2016-2020 (Azores), co-financed by the Azores 2020 Operational Program, which allows Small and Medium-Sized Enterprises to guarantee loans up to a maximum of 3 million euros to finance investments and strengthen working capital.

The Credit Line with Mutual Guarantee IFD 2016-2020 (Azores), follows an invitation from the Managing Authority of the Operational Program for the Azores 2020 to the Development Finance Institution (IFD) as the managing entity of the Debt & Guarantee Fund (FD & G), and contemplates the following situations:

- Financing operations for new investments in tangible or intangible fixed assets and for increases in working capital associated with to an effective reinforcement in activity, in amounts and proportion justifiable in economic and business terms, in any case limited to a maximum of 30% of the project or € 500 000.
- Financing operations for ineligible expenditure for applications approved under the Portugal 2020 program, including working capital, in this case provided that it does not exceed 1/6 of the prospective turnover for the first year after the conclusion of the project and limited to a maximum of € 500,000.

Companies with applications approved within Portugal 2020 cannot finance, under this Credit Line, the same eligible costs, with total or partial superimposition, if this overlap results in exceeding the maximum aid intensity or the maximum aid amount applicable within Regulation (EU) No. 651/2014, of the European Commission, of June 16th, 2014.

Credit operations to be entered into under the Credit Line with Mutual Guarantee, IFD 2016-2020 (Azores) may have a term of up to 10 years, which includes a grace period of 2 years, that which will be defined between the company and the Bank. In this operation it is possible to amortize capital in constant installments, equal and in arrears, quarterly periodicity, benefiting from an independent guarantee on the first request provided by a Mutual Guarantee Society, thus guaranteeing up to 70% of the outstanding capital at any moment of time.

The guarantees issued by the Mutual Guarantee Societies under this Credit Line benefit from a counter-guarantee from the selected Counter-Guarantees Fund of up to 80%, ensuring an endowment to the fund made by FD&G which corresponds to a maximum leverage of 8 times, according to international best practices and resulting from a prudent risk evaluation of this type of operations.

The guarantee fee applicable by the Mutual Guarantee Companies to each of the operations will be subsidized by the Debt and Guarantees Fund (FD & G), in an amount that will reflect the counter-guarantee level of up to 80% and which will be fixed in the Protocol to be concluded between the IFD, as guarantor of the Line, the selected Counter-Guarantee Fund, mutual guarantee societies and banks that participate in the financing operations under the Credit Line with Mutual Guarantee, IFD 2016-2020 (Azores).

The micro, small and medium-sized final recipient companies of the Mutual Guarantee Facility, IFD 2016-2020 (Azores) must have at least one approved financial year and be committed to maintain the volume of employment registed observed at the date of loan contracting during the term of the financing agreement.

The public tender, published in Diário da República on May 24th that sets forth the rules and manages the selection of a Counter-Guarantee Fund, gives provides for a 40-day deadline for submitting applications. After this period, the process of decision and signature of the Credit Line with Mutual Guarantee, IFD 2016-2020 (Azores) with financial intermediaries is started, and it is expected to be fully operational in September 2017.

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