‘Allocated international funds not getting through to SMEs’

By Evie Andreou
With the exception of the Co-op Bank, funds given to banks by the European Investment Bank (EIB) between 2009 and 2011 were not distributed to small and medium size enterprises (SMEs) members of the House commerce committee said on Tuesday.
The committee, which had asked the banks in previous meetings to provide data concerning the period, said that according to the data received, loans of millions of euros were given to large businesses and not to SMEs.
Deputy Zacharias Zachariou said SMEs and especially micro businesses have complained that the money never reached them.
According to the committee, the EIB gave €256 million to the banks, which they added another €256 million and gave loans to 692 businesses.
Committee member Angelos Votsis said that from the money given by the EIB, €50m was given to the Co-op Bank which gave 250 loans to businesses that employ up to nine people.
Votsis added that in Cyprus an SME is considered one that employees two to three people and that the money seems to have been given to bigger SMEs.
An official of the Finance ministry said they are discussing the creation of a supervisory mechanism to control where funds are allocated, but that does not mean funds will be channelled to cash strapped businesses.
The committee once again called on finance minister Harris Georgiades to set up a mechanism that that will directly give loans to SMEs instead of through banks.
Zachariou said the creation of a mechanism independent from banks would ensure the money would go to where it is most needed, whereas the ministry’s proposal would see the money going to businesses that have no real need.
“We will constantly observe the shutting down of small businesses” he said.
He also said that currently business must have two years of profit and not owe any money in state taxes, social security fund or VAT in order to acquire bank loans.
In September, the president and vice president of the EIB were in Nicosia to sign a loan deal with Cypriot banks worth €85 million to be used to finance SMEs.

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.