COSME garancia

The European Investment Fund (EIF) and AVHGA – Rural Credit Guarantee Foundation have signed a COSME agreement in 2016, benefiting from the support of the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe.

The product allows AVHGA to provide more than HUF 50 billion (ca. EUR 160 million) of financing with guarantees for up to 2,000 small businesses in Hungary primarily in the agricultural sectors. AVHGA can facilitate access to several forms of finance for SMEs, such as investment loans, working capitals, overdraft credits and bank guarantees. EIF provides AVHGA with a counter-guarantee under the COSME programme with financial backing from the European Commission allowing the organisation to launch new guarantee products to support SMEs that would otherwise not have received financing.

AVHGA – Rural Credit Guarantee Foundation is aimed to issue on-demand credit-default guarantees to micro, small and medium-sized enterprises which are engaged in the agricultural sector or whose activity is related to a rural areas. The COSME programme provides a 50% counter-guarantee, which is complemented by the foundation’s own resources, so the Foundation undertakes to pay 80 per cent of the amount payable by a customer to the bank. In addition to the COSME counter-guarantee, the foundation’s guarantee can be linked to investment loan, working capital and overdraft facilities and bank guarantee transactions. All small and medium-sized enterprises can participate in the programme independently of their activities, but the foundation strives to develop credit products with financial institutions that prioritize the financing of agricultural enterprises.

The guarantee counterguaranteed by EIF does not contain any state aid element and therefore does not incur any subsidy available to the company. It is also an option for businesses that have already exceeded their state aid limit. In addition, it does not restrict the enterprise to participate in a subsidized credit program or apply for a non-refundable grant.

Main eligibility criteria for enterprises:

  • Domestic micro, small or medium-sized enterprises, including primary producers and family farmers
  • the NACE code of the purpose of the loan is not included in the excluded activities, such as:
    • production and distribution of tobacco products, distilled spirits and related products
    • production and trading of any weapon and ammunition
    • Casinos and gambling activities
  • the enterprise is not a firm in difficulty
  • no bankruptcy, liquidation or liquidation proceedings were initiated against the company
  • the duration of the contract is at least 12 months, up to 10 years
  • the SME must meet the general risk requirements.

The guarantee can be claimed through the Foundation’s financial partners. The company, together with its borrowing intention, needs to indicate its claim for the guarantee, and the bank directly manages the guarantee with the foundation.


More information:

About Cosme:

About the European Investment Fund: