December 01
2020
Dolores Utrilla
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6th April 2020
Banking & Finance Covid-19 Institutional law

Commission and European Investment Fund mobilise 8 billion euros to finance guarantees for small and medium-sized businesses in the context of COVID-19 outbreak

Today, the European Commission and the European Investment Bank Group announced that they have unlocked 1 billion euros from the EU Budget for the European Fund for Strategic Investments (EFSI) that will serve as a guarantee to the European Investment Fund (EIF), part of the European Investment Bank Group. This will allow the EIF to issue special guarantees to incentivise banks and other lenders to provide liquidity to at least 100,000 European small and medium-sized enterprises (SMEs) and small mid-cap companies hit by the economic impact of the coronavirus pandemic, for an estimated available financing of 8 billion euros.

As of today, the EIF is offering to the market dedicated EFSI-backed guarantees, via a call for expressions of interest to several hundred financial intermediaries, comprising banks and alternative lenders. Key features of these guarantees will be their simplified and quicker access to the EIF guarantee; their higher risk cover – up to 80% of potential losses on individual loans (as opposed to the standard 50%); their focus on working capital loans across the EU; and their flexible terms, including postponement, rescheduling or payment holidays. These new features will be accessible to new as well as existing financial intermediaries already working with EIF, who will extend special conditions to more than a hundred thousand companies benefitting from guarantees under pre-existing programmes.

Following today’s call for an expression of interest, financial intermediaries with existing EIF agreements will be able to access the new guarantees immediately upon request. Other financial intermediaries can access the guarantees following a swift application process. SMEs will be able to apply directly to their local banks and lenders participating in the scheme, which will be listed on www.access2finance.eu.

More information is available here.

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