On 6th April 2020 The European Commission has unlocked €1 billion from 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.

At a glance:

  • The EIF will be able to issue special guarantees to incentivise banks and other lenders to provide liquidity
  • At least 100,000 European SMEs and small mid-cap companies hit by the economic impact of the coronavirus pandemic are targeted
  • An estimated available financing of €8 billion.
  • Money able to flow already in April.

Today’s announcement fulfils the commitment in the Commission Communication of 13th March to bring immediate relief to hard-hit SMEs. It is part of the package of measures announced by the EIB Group on 16th March designed to rapidly mobilise support for Europe’s SMEs and mid-caps.

The €1 billion unlocked from the EFSI under the COSME Loan Guarantee Facility and the InnovFin SME Guarantee under Horizon 2020 allows the EIF to provide guarantees worth €2.2 billion to financial intermediaries, unlocking €8 billion in available financing.

The guarantees will be offered through the EIF to the market, via a call for expressions of interest issued on 6th April to several hundred financial intermediaries, comprising banks and alternative lenders.

Key features of these guarantees will be:

  • Simplified and quicker access to the EIF guarantee
  • A higher risk cover – up to 80% of potential losses on individual loans (as opposed to the standard 50%);
  • Focus on working capital loans across the EU;
  • Allowing for more flexible terms, including postponement, rescheduling or payment holidays.

The new features will be accessible to new as well as existing financial intermediaries already working with EIF.

Financial intermediaries with existing EIF agreements under these COSME and InnovFin programmes will be able to access the new guarantees immediately upon their request. Other financial intermediaries can access the guarantees following a swift application process. In that way new money can already start flowing to hard-hit businesses in April. 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.

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