SME Invest Credit Lines Description and Results Jeremie Networking Platform Workshop II – Combination of repayable FEI with subsidies Brussels, 20 May 2011

2. SME Invest rationale 1.Credit finance is important to SME, as they have little or no access to alternative sources of capital - stock market, venture capital, mezzanine capital, bond issues, etc 2.But SME have difficulties in obtaining loan finance: a)Have weak own funds ratios b)Usually have lack ok bankable collateral c)Higher requirements on risk profiles (Basel II and III) 3.Difficulties were amplified by the international financial crisis and the impact on the Portuguese financial markets during the implementation

3. SME Invest solution for financing SME

4. SME Invest – decision workflow Compete ERDF Portuguese Budget FINOVA Holding Fund Counter Guarantee Fund Mutual Guarantee Societies BANKS SME A B D EF G A Contribution to FINOVA holding fund B Capital of Counter-guarantee Fund C Counter- Guarantee (80% of guarantee) D Guarantee (50% of the loan amount) E FINOVA pays to SGM guarantee fees F FINOVA supports part of interest charges G SME participates in the capital of SGM H Loans to SME C H

5. SME Invest – Loan conditions

6. SME Invest – amount to invest on FCGM Ensure that the public investment on FCGM (counter-guarantee fund) will not be overestimated nor underestimated – historical default rates and other benchmarks

9. SME Invest – results (1) 105% of the budgeted amount for credit lines

8. SME Invest – definition of rating classes Counter guarantees issued M 489 Guarantees issued M 611 Bank financing to SME M Public investment M 154 Include: investment on counter- guarantee fund + subsidies on interests and fees Leverage ratio – 8:1

More information: Nelson de Souza May 2011