The European Investment Bank (EIB) will lend Cypriot banks €85 million to be used to finance small and medium businesses, it was announced on Friday.
The deal, which is guaranteed by the government, provides for €50 million to be given to Bank of Cyprus and €35m for Hellenic Bank.
“I encourage the banks not to lose time and ensure that the money goes to good projects of good small companies,” EIB president Werner Hoyer said.
Hoyer was asked whether he had received complaints that banks made it hard for people to borrow the money.
He said he did but struck a note of caution, saying that the bank could have been overly careful due to the stress tests or simply because the project was not convincing.
Finance Minister Harris Georgiades, who signed the loan deals on behalf of the state, was also aware of the problem.
“We have discussed specific ways with the EIB and the banks to speed up the pace of implementing this schemes,” he said.
The minister said granting government guarantees would increase the dispersal of funds to the real economy in sectors that were considered viable.