A fund to support small and medium businesses may appear in Russia

A guarantee fund to support small and medium businesses may appear in Russia. The Ministry of Finance has sent proposals to the government for additional support of small and medium businesses through state guarantees. President Vladimir Putin instructed the government to prepare them at a meeting to improve investment and business activity that took place a week ago.

According to the Ministry Department Director Constantin Vyshkovsky, such fund could be established by banks that lend to small and medium businesses, and the government would guarantee a part of its obligations: If a borrower can not repay the loan, bank turns to the fund. A similar mechanism works in retail deposits. If the fund can not pay, the treasury shall bear the costs.

This year the Ministry of Finance has allocated 20B RUR of state guarantees for projects of small and medium businesses. SME Bank (100% owned by Vnesheconombank) will collect them back in the near future. It will also act as a guarantor to private banks.