EU sets up usury scheme in Albania

2023-09-18 21:13:00, Denoncim CNA

For several months, the Besa fund has launched a publicity campaign in the media to market a loan product called "Support your business", which targets small businesses. The loan, which enables micro and small enterprises to borrow from 300,000 to 3,000,000 ALL or 2,000 to 25,000 euros, is part of an aid scheme from the European Union.

" This loan is co-financed by the European Union within the framework of the EU Program for Employment and Social Innovation (EaSI), the European Investment Bank and the European Investment Fund ," states the official announcement of the Besa Fund.

For this purpose, a few months ago the European Union granted a loan of 10 million euros to the Besa fund through the European Investment Fund. The money has now started to be used by the Besa fund, being disbursed as loans to small businesses in Albania. But the terms of the loans are worthy of usury.

Commissions and usurious interests

The loan "We support your business" is granted to businesses for a maximum term of up to 8 years. Interest rates start at 18 percent for loans in Lek and 17 percent for loans in euros. So these are the floor rates, while the real rates can be even higher than that.

EU sets up usury scheme in Albania

" We believe that this initiative will have a significant impact on the development of micro and small enterprises in Albania, as well as on the creation of new businesses and jobs," ironically stated in the official announcement of the signing of the loan agreement . with the EU and the Besa fund.

But nominal interest rates do not show the full cost of EU-financed credit. Apart from them, businesses are charged a disbursement commission of up to 5 percent. Now two simple calculations.

A business, which receives a loan of 25 thousand euros with a term of 5 years, will receive 23 thousand and 750 euros because 1250 euros are kept as a disbursement commission. For this loan, this business will return to the Besa Fund a minimum of 37,300 euros at the end of 5 years. This is the minimum cost because it is calculated above the floor rate, as the rates can be over 17 percent.

This is the scheme through which the European Union is supporting small business and employment in Albania. A Sude on reverse. That gives you 23.7 thousand euros and takes back 38 thousand euros for 5 years./ Oligarkia.al