Small and medium-sized enterprises, startups and self-employed professionals in Cyprus will gain access to new financing tools and loans through a planned public development body aimed at closing existing funding gaps.
The Cyprus Business Development Organisation (CBDO) will be established as a legal entity under public law and is expected to support businesses registered and operating in the Republic.
The organisation will be able to deploy a range of financial instruments, including loans, guarantees, equity-based tools and services. It will also be able to provide grants through the use of European funds, while all decisions will be subject to national and EU state aid rules.
According to the government, the new body is intended to address financing gaps currently faced by eligible businesses and self-employed professionals, particularly in access to capital.
Fast-track parliamentary process
The draft legislation was submitted to Parliament in recent days and will be examined next Monday by the House Finance Committee.
The committee has a maximum of two sessions to complete its review before Parliament breaks for the summer recess. The law must be approved before July 9; otherwise, Cyprus risks losing funding from the Recovery and Resilience Facility.
The Recovery Plan is approaching its final implementation phase, with the European Commission not expected to grant any extension. Member states are required to meet their commitments by the end of August, or risk losing millions of euros in EU funding.
The Ministry of Finance is therefore pushing for swift approval of the 60-page bill and has already contacted Parliament to expedite its passage.
Cyprus must also appoint the organisation’s board of directors before the end of August.
Mandate and structure
The organisation’s mandate includes improving access to finance for eligible companies, including direct funding, while promoting competitiveness, innovation, extroversion, and the green and digital transition.
It will also support broader economic, social and environmental objectives linked to sustainable development.
The bill defines the powers of the organisation, including the design of financing schemes and the provision of loans, all in line with EU state aid rules.
It also prohibits the organisation from accepting deposits from the public and requires it to implement anti-money laundering and counter-terrorism financing safeguards.
The legislation sets out the governance structure of the board, including its composition, appointment criteria, term of office, removal conditions and meeting procedures.
Board members will be subject to restrictions on certain activities, while eligibility criteria and incompatibility rules will apply to senior positions.
The organisation will also be required to comply with the public governance code and to adopt a corporate governance framework.
Expected impact
The Ministry of Finance said it does not expect immediate economic or social effects on citizens or the macroeconomic environment.
It added that the impact will be mainly administrative within the public sector, while positive effects are expected for the business environment through improved access to finance for SMEs.
The ministry also acknowledged that the creation of the body will generate administrative workload linked to its establishment, staffing and operational setup.