(Source: https://www.eventshigh.com/detail/Delhi)

A new type of support guarantee loans to small businesses was launched in Moscow. The first guarantee under the letter of credit issued by the Moscow Guarantee Fund allowed the supplier of aerodrome special equipment to strike a deal worth 700 thousand euros.

The Fund of Small Business Credit Assistance of Moscow (Moscow Guarantee Fund) has launched a new type of support for small and medium-sized businesses - a guarantee under a letter of credit. A letter of credit is an account opened with a bank, giving you the opportunity to reserve the necessary amount of money for trade transactions. The account is opened by the buyer at his/her own expense or on the terms of the loan agreement. In case of full compliance of the parties with the agreement terms, the bank pays a certain amount of funds to the recipient.

“The guarantees under the letters of credit make it possible to expand the access of entrepreneurs to credit resources and render additional promotion to the development of small and medium-sized businesses in the capital. This financial product greatly facilitates conducting commodity transactions and allows people to use state support without having to conclude a loan agreement. Guarantees cover up to 70% of the letter of credit, but no more than 100 million roubles. The interest rate makes up 0.75% per annum”, according to AlekseiFursin, the Head of the Department of Entrepreneurship and Innovative Development of the City of Moscow.

Read More Articles about Russian Business

The first agreement was concluded with a company manufacturing industrial infrastructure facilities and supplying aerodrome special equipment. The company issued a letter of credit for the purchase of foreign equipment in the amount of 700 thousand euros with Vozrozhdenie Bank. The company covered a part of the security on the transaction by the guarantee of the Moscow Guarantee Fund.

This scheme is considered one of the most reliable ways to conduct settlements. The buyer is guaranteed to receive the goods with a deferred payment, and the seller receives payment for the goods delivered. Such form of payment as a letter of credit is often used by importers and exporters, including companies in the SME sector on the conditions of insufficient trust between parties in trade relations.

The guarantee of the Fund makes the transaction more reliable, helps to cover the risks and makes it easier for the bank to provide a letter of credit. Moscow small and medium-sized businesses that pay taxes and are not engaged in the production of excisable goods (tobacco and alcohol, oil products, etc.) can take advantage of this type of support.

You can send an application for obtaining a guarantee under the letter of credit through the Business Services Centres (these are located in all administrative districts of Moscow, as well as at the“Digital Business Space” (47 Pokrovka Str.), at the InterdistrictInspectorate of the Federal Tax Service No. 46, at the Multifunctional centres of Central and Southwestern Autonomous District), or through the website of Fund of Small Business Credit Assistance of Moscow.

Find more about Russian laws and consult our attorneys.