Bridging Loans for NPOs

Symbiosis Foundation, Hungary, photo: Symbiosis

Agro – drevinový ekosystém BBSK, s.r.o., Slovakia, photo: Agro

Erste Group and ERSTE Foundation supported NPOs with bridging loans

The coronavirus pandemic has not only severely impacted public budgets, private individuals and businesses, but also the NGO sector. While civil society organisations have been struggling with similar problems as the for-profit sector, in most countries they were offered much less state compensation aid or none at all. As a direct response to this situation, ERSTE Foundation implemented measures as early as spring 2020 that were specifically tailored to civil society actors coping with the pandemic.

In 2020, Erste Group and ERSTE Foundation launched a comprehensive social banking initiative providing a total of around EUR 25 million in liquidity to non-profit organisations in Austria, Croatia, the Czech Republic, Hungary, Romania, Serbia, and Slovakia. Through its subsidiary banks, Erste Group granted loans at particularly favourable terms to bridge the liquidity gap. ERSTE Foundation supported the social institutions that took out the loans by covering interest payments for the newly concluded financing arrangements until the end of the crisis year. The aim was to support non-profit institutions in overcoming financial bottlenecks caused by the coronavirus crisis. In Austria, for example, these loans were offered to all registered non-profit associations and foundations in the health, care and social care sectors. The non-profit organisations could apply for a bridging loan of up to EUR 300,000.

What was the impact of these loans? A few comments from borrowers:

Gabriella Miklós, Symbiosis Foundation

“Although Covid-19 restrictions did not affect the possibility to work outdoors, the purchase of protective equipment and other farming and construction supplies was a great financial burden for us. Yet, thanks to the interest free loan provided by Erste Bank Hungary, we were able to ensure the wellbeing of those 40 people living at the residential houses at the farm and avoid any illness during the pandemic. Moreover, we continued building another guesthouse, which will not only fulfil the needs of families with disadvantaged children, but also allow them to earn money and become taxpaying citizens of our community.”

Milan Vano, Agro – drevinový ekosystém BBSK, s.r.o.

“As a social enterprise, our aim is to contribute to food sovereignty, vocational education of students, employment of disadvantaged and vulnerable people as well as to regional development. Thanks to the interest-free loan from Slovenská sporiteľňa we were able to avoid extra costs to our cash-flow and to further develop our business – also in times of a global pandemic.”

Ákos Tóbiás, Mother-of-Pearl Association of Disabled People

“We started working with Erste Bank Hungary in the beginning of 2020 to finance our new housing project for people with autism. Yet, with the pandemic we were challenged with extra difficulties as well as additional costs for hygienic measures. The interest-free loan has helped us to free up some capital, which we could then use to invest in two new dryers.”