Germany could expand small business loan scheme to EU strugglers

BERLIN Sat Jun 8, 2013 10:20am EDT

BERLIN (Reuters) - Portugal and Greece are interested in the same kind of support for lending to small business that Germany agreed with Spain this week, a spokeswoman for the German finance ministry said on Saturday, but they will need a state financing body to qualify.

Anxious to support growth and combat unemployment elsewhere in the euro zone, Berlin has laid out a scheme to grant Spanish small and medium-sized companies (SMEs) aid of roughly 1 billion euros ($1.32 billion).

A German magazine reported on Saturday that the government wants to extend the scheme to make it easier for companies to get credit in other countries across the currency area's crisis-stricken southern half.

A spokeswoman for the German finance ministry said the measure was part of an overall strategy to promote growth and employment, especially for young people, in the countries which have been bailed out in Europe's debt crisis.

"We must succeed in solving the acute financing problems of companies that have a robust business model and good growth prospects," a spokeswoman for the German finance ministry said in a statement, asked to confirm the magazine report.

"Portugal and Greece are interested in similar measures (to Spain)," she said.

The scheme for Spain laid out this week will see German state development bank KfW KFW.UL provide loans to state credit agency Instituto de Credito Oficial (ICO), which will pass the money on to small companies.

The spokeswoman said both Portugal and Greece would need a similar agency to receive such loans.

"I have already told my Portuguese colleague: 'You can have all of that too,'" the report in weekly WirtschaftsWoche quoted Finance Minister Wolfgang Schaeuble as saying.

Finance and labour ministers from France, Spain, Germany and Italy are due to meet in Rome on Friday to discuss measures to combat youth unemployment, which is at record levels across Europe.

Germany, blamed by citizens in southern Europe for insisting on spending cuts and structural reforms in exchange for bailouts, is keen to shore up its image as the risk of social and political unrest grows.

($1 = 0.7564 euros)

(Reporting by Michelle Martin; editing by Patrick Graham)