The European Commission has approved, under EC Treaty state aid rules, an amendment to a Lithuanian scheme allowing aid to be granted of up to €500 000 per company, initially approved on 8 June 2009.

The European Commission has approved, under EC Treaty state aid rules, an amendment to a Lithuanian scheme allowing aid to be granted of up to €500 000 per company, initially approved on 8 June 2009. The amendment will extend the scope of application of the scheme, in particular to support small non-agricultural businesses in rural areas until the end of 2010. The amendment is in line with the Commission's Temporary Framework for state aid measures to support access to finance in the current financial and economic crisis, because it is limited in time and only applies to companies that were not in difficulties on 1 July 2008. It is therefore compatible with Article 87(3)(b) of the EC Treaty, which permits aid to remedy a serious disturbance in the economy of a Member State.

Competition Commissioner Neelie Kroes said: "The current crisis affects in particular the availability of capital for small businesses in rural areas. Lithuania has taken advantage of the Temporary Framework by opening its scheme on limited amounts of aid to this kind of business. The Commission has done its part, by assessing the amendment swiftly."

The aim of the original scheme was to grant aid in the form of guarantees to credit institutions for loans taken by SMEs and large enterprises during the financial and economic crisis.

Due to the more stringent credit terms and increased interest rates as a consequence of the financial and economic crises, small enterprises in rural areas in Lithuania are facing particularly acute economic difficulties. The amendment is aimed at including two measures (measure on diversification into non-agricultural activities and measure on support for business creation and development) into the scheme. Both measures are integrated in the Lithuanian Rural Development Programme 2007-2013.

T he amendment allows Lithuania to provide direct grants of up to €500 000 to support especially small, alternative, non-agricultural businesses in rural areas. Undertakings active in the primary production of agricultural products or the processing and marketing of agricultural products are explicitly excluded from the scheme. The measure expires by the end of 2010.