Compensation of Loan Interest

For applications submitted from 1 March 2023 onwards, reimbursement of up to 50% of the interest paid may be granted on loans for which the interest reimbursement is applied for with the application within one year from the date of signing of the loan agreement, provided that no more than one year has elapsed from the date of signing of the loan agreement to the date of submission of the application.
For applications submitted up to and including 28 February 2023, reimbursement of up to 95% of the interest paid may be granted for loans taken out from 1 January 2020, where the loan agreement is signed no earlier than 1 January 2020.

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Interest on working capital loans is not reimbursable except where the working capital is part of the loan, as set out in point 3.6 of the description of the terms of the measure. Only interest on investment loans or financial lease/leasing contracts, as defined in the description of the terms of the measure, is eligible for reimbursement.

What are the benefits?

Enterprises or entrepreneurs can recover part of the funds for the interest paid on the loan and allocate these funds to other business needs.

What companies are eligible?

The borrower, a small or medium-sized enterprise (SME) as defined in the Law on the Development of Small and Medium-Sized Enterprises of the Republic of Lithuania can apply: a micro, small or medium-sized enterprise or an entrepreneur, where the loan agreement is valid (not expired or terminated) at the time of the assessment.

Until 28 February 2023 (inclusive), applications are open to SMEs with loans taken out from 1 January 2020, where the loan agreement is signed no earlier than 1 January 2020. Alternatively, this can apply where loan agreements signed before 1 January 2020 provide fresh financing for a new investment and an amendment to the loan agreement for the provision of the new financing is signed after 1 January 2020. (Please note, a change in the duration or amount of an existing loan is not considered to be the provision of new financing.)

From 1 March 2023, applications are open to SMEs for loans for which interest compensation is applied for within one year of the date of signature of the loan agreement, where no more than one year has elapsed between the date of signature of the loan agreement and the date of application. Alternatively, new financing for a new investment that has been granted under a loan agreement with a duration or amount of more than one year from the date of signature to the date of submission of the application may also be eligible. (Note: a change in the duration or amount of an existing loan is not considered to be a grant of new financing). For this, no more than one year must have elapsed between the date of signature of the amendment to the loan agreement to grant new financing, and the date of submission of the application.

Description of the instrument (cumulative version in force from 1 March 2023)

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To receive interest reimbursement, the applicant must complete and submit an application in the Electronic Application Information System (E-AIS) and submit other required documents.

List of documents required for interest reimbursement (* must be submitted with the application):

Application
Grant agreement
'One company' declaration
Declaration of small or medium-sized enterprise status (see video instructions for completion)
Loan agreement or copies)
Current repayment schedule signed by the financial intermediary
Certificate of the applicant’s current account, certified by the signature of the financial intermediary’s employee. An equivalent document in another form (e.g. a copy of the current account agreement) may be submitted. Provide a certificate or other equivalent document in respect of the applicant’s current account into which the compensation amounts would be paid
Investment project (business plan and/or free-form investment description document). A description of the economic activity for which the applicant has been granted a loan and the investments that have been and/or will be made with the proceeds of the loan for which interest reimbursement is requested.
Notice on the processing of personal data in the context of the implementation of the Terms of Reference of the measure ‘Interest Compensation for Small and Medium-sized Enterprises’ (for more details, see the ‘frequently asked questions’ (FAQs) section of this measure (No 15)).
Copy of the relevant business licence or self-employed certificate (only if the applicant is a natural person (entrepreneur)).
Power of attorney from the manager of the company or the entrepreneur to the authorised person, or a copy thereof, to be provided only if the documents are submitted and signed by an authorised person.
Copy of the extract from the real estate register or the vehicle registration certificate. For the acquisition of immovable property and/or vehicles
Copies of the contract or decision for the project supported by EU structural funds, state and/or municipal budgets of the Republic of Lithuania, other monetary resources at the disposal of the state and/or municipalities, other EU financial assistance instruments or other international assistance. To be provided only if the loan for which interest compensation is requested is intended to finance the supported project or part of it.

A successor (in cases where the borrower is reorganised by way of merger or demerger) who has taken over the borrower’s obligations in relation to the loan agreement under which the interest compensation decision has been taken, and who wishes to take over the borrower's interest compensation, must submit an application for the takeover of the borrower's interest compensation to INVEGA by e-mail to dpk2@invega.lt:

Evidence of succession;
A free-form application for reimbursement of interest, indicating the number of the grant agreement and of the decision on the loan agreement under which the successor in title has taken over the borrower's obligations and under which the decision on reimbursement of interest was taken;
'One company' declaration (see video instructions for completion);
Declaration of small or medium-sized enterprise status (see video instructions for completion);
A statement of the applicant’s (successor’s) current account, certified by the signature of the financial intermediary’s employee. An equivalent document in another form (e.g. a copy of the current account agreement) may be submitted. Provide a certificate or equivalent document in another form in respect of the applicant’s current account to which the reimbursement amounts would be paid
Notice on the processing of personal data in the context of the implementation of the Schedule of Conditions of the measure ‘Interest Compensation for SMEs’ (for more details, see the ‘frequently asked questions’ (FAQs) section of this measure (No 15)).
A power of attorney from the head of the company to the authorised person; only if the documents are submitted and signed by an authorised person.

Note: All documents sent to dpk2@invega.lt must be signed with a qualified electronic signature.

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What is the maximum amount?

Applications submitted from 1 March 2023 onwards will be reimbursed up to 50% of the amount of interest actually paid, up to a maximum of 7% per annum.
Where the reimbursement is for a loan taken out for an electric car, the reimbursement will be for a maximum of €35,000 including VAT on the loan. Where the reimbursement is granted for a loan taken out for the purchase of a commercial vehicle (class N1), the reimbursement shall be for a maximum of EUR 25,000 including VAT.
The maximum period for which interest can be reimbursed is 36 months. The interest reimbursement period may not exceed 36 months from the first day of the month following the month in which the application is submitted to INVEGA, and may not exceed the end of the repayment term specified in the loan agreement.
Until 28 February 2023 (inclusive), applications are open to SMEs with loans taken out from 1 January 2020, where the loan agreement is signed no earlier than 1 January 2020 and the loan agreement is valid (not expired or terminated) at the time of the application assessment. Alternatively, where loan agreements signed before 1 January 2020 provide new financing for a new investment, an amendment to the loan agreement to provide new financing signed after 1 January 2020 may be eligible. (Please note, a change in the duration or amount of an existing loan is not considered to be the granting of new financing).
From 1 March 2023, SMEs may apply for loans for which the interest compensation is applied for within one year of the date of signature of the loan agreement, where no more than one year has elapsed between the date of signature of the loan agreement and the date of submission of the application. The loan agreement must be in force at the time of the assessment of the application (not expired or terminated). Alternatively, if new financing for a new investment is granted under a loan agreement with a duration of more than one year from the date of signature to the date of submission of the application, the time between the date of signing of the amendment to the loan agreement to grant the new financing and the date of submission of the application shall be no more than one year. (Please note, a change in the duration or amount of an existing loan is not considered as a grant of a new financing.)
Compensation may be granted within the limits of de minimis aid. The total amount of de minimis aid granted to any one undertaking during any period of three financial years must not exceed EUR 200,000 (or EUR 100,000 in the case of road haulage activities).

How does it work?

In order to benefit from this instrument, an application must be submitted to INVEGA through the electronic application system.

The application is evaluated within 30 working days from the receipt of the duly submitted documents.
After a positive decision, compensation of interest is paid out monthly.
Upon the signing of the grant agreement, the borrower does not need to submit any additional documents to INVEGA. Compensation is calculated on the basis of the information received from a financial institution.

Information on adopted decisions can be found in the section Contract /Decisions in the electronic application system.

What kind of loan agreements are eligible?

The loan is granted under a loan agreement with a financial institution that has a valid agreement with INVEGA on cooperation in the implementation of interest compensation measures. This clause does not apply when the loan is granted under INVEGA’s financial instrument “Startuok”.
No bankruptcy and/or restructuring proceedings have been initiated against the applicant, and if the applicant is a businessman, the bankruptcy proceedings of the natural person have not been initiated.
The applicant is eligible to de minimis support under the Commission Regulation (EU) No. 1407/2013.
No conviction regarding crimes of financial economic character has been adopted and entered into effect within the last 5 years with regard to the applicant, its owners who have at 25 percent of the shares and/or other interests marking participation in the company’s capital and/or votes, and/or managers.
When interest is compensated to the applicant, the interest is and will not be financed from the State budget of the Republic of Lithuania and/or municipal budgets and other monetary sources at the disposal of the State and/or municipalities, structural funds of the European Union, other measures of financial support of the European Union, other international support funds, and if the State budget funds are attributed to cover the interest, it will not be paid more than once.
The applicant and its beneficiary, or the natural and legal persons for whose benefit the loan will be used, are not subject to sanctions (any trade, economic or financial sanctions, embargoes or other restrictive measures).

What loan agreements are considered eligible?

Loan – an investment loan or finance lease (leasing), including refinancing, where the investment was made with own funds within six months prior to the signature of the loan agreement. An overdraft, factoring, letter of credit or bank guarantee is not considered a loan under the facility.
Finance lease (leasing) is a service whereby an asset acquired by a finance lease company under its ownership and independently selected by the lessee on an instalment basis is transferred for the use and management of the lessee of the finance lease. This is arranged under a finance lease contract and becomes the property of the lessee upon final settlement by the lessee with the finance lease company.
Investment loan – a loan of which at least 51% is intended to be used for the borrower’s investment in its tangible and intangible fixed assets used in the borrower’s business activities eligible under point 11 of the Schedule to the Conditions of the measure ‘Interest Compensation for Small and Medium-sized Enterprises’, with the remainder used to replenish the borrower’s working capital.
The loan is granted on the basis of a loan agreement concluded with a financial intermediary (list of financial intermediaries) that has a valid agreement with INVEGA on cooperation in the implementation of interest compensation measures. This clause does not apply when the loan is granted under INVEGA’s financial instrument 'Start-up'.
For applications submitted up to and including 28 February 2023, a loan agreement must be signed no earlier than 1 January 2020 and be in force at the time of application. Alternatively, where loan agreements signed before 1 January 2020 provide new financing for a new investment, an amendment to the loan agreement to provide new financing signed after 1 January 2020 may be eligible. (Please note, a change in the duration or amount of an existing loan is not considered to be the granting of new financing.)
For applications from 1 March 2023 onwards, a loan agreement under which interest reimbursement can be applied for with the application no later than one year from the date of signature of the loan agreement. No more than one year must have elapsed between the date of signature of the loan agreement and the date of submission of the application, and the loan agreement must be valid at the time of the assessment of the application. Alternatively, new financing for a new investment granted under a loan agreement that has been signed for more than one year from the date of signature to the date of submission of the application may also be eligible. (Please note, a change in the duration or amount of an existing loan is not considered to be a grant of new financing.) No more than one year must have elapsed between the date of signature of the amendment to the loan agreement to grant new financing, and the date of submission of the application.
If the loan agreement allocates part of the loan proceeds to expenditure not eligible under the Schedule, the interest shall be reimbursed only on the part of the loan allocated to the eligible expenditure provided for in the Schedule. In such a case, the loan agreement must distinguish the loan tranches in such a way as to identify the purpose of the eligible part of the loan proceeds at the time of disbursement, the repayment schedule for that part and the interest rates applicable to it.

In what cases interest is not compensated?

When the loan is for the following activities of the SME: (See link here)
Real estate activities (group 68.1-68.3);
Freight transport by road (class 49.41), renting of goods vehicles (subclass 77.12.10), when the loans are for the purchase of goods transport vehicles;
Crop and animal production, hunting and related service activities (division 01 (except 01.6));
Forestry and logging (group 02.1, group 02.3, subclass 02.30.10, subclass 02.30.20);
Fishing and aquaculture (division 03);
Specialised retail trade services of arms and ammunition (subclass 47.78.30);
Gambling and betting activities (division 92);
Financial and insurance activities (divisions 64-66);
Distilling, rectifying and blending of spirits (division 11.01); wholesale
of alcoholic beverages (subclass 46.34.10);
Manufacture and/or wholesale of tobacco products (division 12 and class 46.35);
Generation, sale and distribution of electricity (group 35.1).
Where the loan is for the purchase and/or construction of immovable property and/or for investment in the substantial improvement of a building/structure with a view to its sale or other transfer, including renting and leasing, and not for own use. Own use of property is defined as when at least 60% of the property is intended to be used for the economic activity of the borrower. This also applies to the purchase or construction of residential property and/or investment in the substantial improvement of a residential building/structure where the applicant is a business or legal person and its activities are not carried out in residential premises.
Where the loan is for the purchase of non-commercial vehicles (M1 class). This prohibition does not apply to applicants whose principal and effectively pursued activity is the rental of cars, the provision of services by a driving school, the carriage of passengers, including taxis and shuttles, or the purchase of special purpose vehicles. The activity of renting cars is deemed to be effectively carried out when such services are offered to the public on the market.
Where the loan is for the purchase of a non-new commercial vehicle (class N1) (6,000 km or more than six months in service), excluding special purpose vehicles.
When the loan is used to purchase a new commercial vehicle (class N1) with a value exceeding EUR 40,000 including VAT according to the sales contract, or exceeding EUR 60,000 including VAT for the purchase of electric vehicles, except for special purpose vehicles.
When the loan proceeds are used to finance financial assets or to pay dividends or bonuses.
Where the loan proceeds are intended to provide a loan to a third party, to refinance (cover) debt obligations (loans, overdrafts, factoring, letters of credit, bank guarantees) between third parties and the borrower, except where the loan proceeds refinanced investments made by the borrower up to six months before the loan agreement was signed. The point at which the investment is made is deemed to be the date of final settlement of the investment.
Under the loan agreement, the loan proceeds are intended to replenish working capital, except where the working capital is part of the loan, as set out in paragraph 3.6 of the Schedule.
Under the loan agreement, the loan proceeds are used to finance investments made outside the territory of the Republic of Lithuania.
Under the loan agreement, the loan proceeds are intended for the construction and/or installation and/or modernisation of electricity generating plants and/or electricity generating facilities with a view to their sale or other transfer to other persons, including the lease and leasing of the assets, and not for the use in the borrower’s operations.

What are the requirements for applicants?

The applicant at the time of application is a borrower who qualifies as an SME – micro, small or medium-sized enterprise – or an entrepreneur, a natural person engaged in an economic activity.
The applicant is not the subject of bankruptcy and/or restructuring proceedings, or, if the applicant is a business person, is not the subject of bankruptcy proceedings against a natural person.
The total amount of de minimis aid granted to the applicant as a single enterprise in any three-year period does not exceed the limits laid down in Regulation (EU) No 1407/2013.
The applicant, its owners and/or directors holding at least 25% of the shares and/or other interests and/or votes in the capital of the company have not been convicted of any criminal offence of an economic-financial nature within the last five years, and have no criminal record that has not been discharged or acquitted.
The interest reimbursed to the applicant will not be financed from other state budgets and/or municipal budgets of the Republic of Lithuania, other monetary resources at the disposal of the state and/or municipalities, the European Union Structural Funds, other European Union financial assistance instruments or other international assistance funds, and for which it would be paid more than once with the allocation of the state budget funds.
The applicant and its beneficiary, or the natural and legal persons for whose benefit the loan will be used, are not subject to sanctions (any trade, economic or financial sanctions, embargoes or other restrictive measures).

dpk2@invega.lt +370 5 210 7510

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