A protection shield

The European Investment Bank will set up a protection shield for European businesses. The economic and financial dynamics immediately ahead of us are approaching a tipping point: we have very little time left to put in place any measures to safeguard the European economy from this unprecedented shock.

The EIB Group is creating a Pan-European Guarantee fund in response to COVID-19 of €25 billion. This guarantee fund will enable the EIB Group – in partnership with local lenders and national promotional institutions – to scale up its support to small and medium-sized companies (SMEs) and others in the real economy by mobilising up to €200 billion, in addition to the support package announced already.

 

How will the guarantee fund work

The €25 billion guarantee fund will be funded by EU Member States pro rata to their shareholding in the EIB and/or other institutions.

Thanks to the guarantee, the EIB Group will be able to provide existing products to local banks and other financial intermediaries, who are in close contact with businesses in all Member States and can unlock financing to the real economy, without risking financial instability.

The guarantee will support different types of operations of the European Investment Bank, and its subsidiary, the European Investment Fund.

  • By guaranteeing parts of portfolios, our operations under the guarantee fund will free up capital for the financial intermediaries involved to make more financing available.
  • At least 65% of the financing is earmarked for small and medium sized businesses.
  • Up to 23% will go to companies with 250 or more employees, with restrictions applying to companies with more than 3 000 staff.
  • Up to 5% can go to public sector companies and entities active in the area of health or health-research or providing essential services related to the health crisis.
  • Up to 7% can go to venture and growth capital and venture debt.

The guarantee fund will provide guarantees to the EIB and EIF to reimburse any possible losses incurred for included operations. By pooling credit risk across all of the European Union, the overall average cost of the fund will be significantly reduced, compared to national schemes.

The use of the EIB also means that all Member States will benefit from the sharing of the bank’s top-level credit rating.

Who can benefit?

The guarantee fund is designed to primarily support businesses, with a focus on SMEs, in EU Member States that are high-risk but viable in the long-term and, in the absence of the COVID-19 pandemic, would meet a lender’s or other financial intermediaries’ requirements for commercial financing.

How, where and when can companies apply for these funds?

Most of the financing will be made available through financial intermediaries in all the EU countries; that means either through commercial banks or National Promotional Institutions. Once the funds are available, companies can file requests with the participating banks and intermediaries. This list will be available on eib.org.

A majority of the funding made available will likely be requested by companies in the hardest-hit Member States and most heavily affected sectors. Ceilings and floors for the largest and smallest countries benefiting from the fund’s activity will apply, thus providing for a balance in the allocations.

The EIB Group is working very hard for the funds to become available as soon as possible and is fast-tracking the decision-making process. The Fund will be formally established when Member States representing 60% of EIB capital will have their contribution agreements signed.

Additional support measures

The European Investment Bank already announced its first measures to support the impacted SMEs in March. Some of this has been made possible with the help of guarantees by the European Commission. These measures are currently being deployed.

Additionally, the EIB Group has €6 billion available for investments in the healthcare sector. This is available for medical infrastructure, further research, or other vaccine- and cure-related financing. Since the EIB Group would finance or guarantee parts of projects, it is expected that this €6 billion would mobilise an even higher figure in supported investments.

Additional funding could go to healthcare infrastructure, further research or financing for vaccines and cures. We are also working on making another €5 billion available for coronavirus support to countries outside the EU - both to support healthcare infrastructure, as well as to maintain access to finance for impacted SMEs.

A green and sustainable recovery

The EIB Group remains open for business while taking good care of its employees and business partners. Both the EIB and EIF closely monitor the economic impact of the COVID-19 crisis on their portfolio and the operations of their underlying companies. We continue to rigorously support investment in a green and sustainable recovery for Europe.

For SMEs and mid-caps looking for finance

We will be publishing the list of EIF intermediaries for COVID-19 related financing support on EIF’s dedicated page as soon as the relevant financing agreements have been concluded.

Meanwhile you can check here the EIF’s current network of financial intermediaries in your country.

For financial institutions willing to partner with the EIB Group

Please visit our dedicated pages for the main product categories:

  • Lending/funding products: EIB
  • Guarantees/risk sharing: EIB - EIF
  • Equity: EIB - EIF

Calls for loan portfolio guarantees to intermediaries under EU programmes COSME LGF and InnovFin SMEG has been published on EIF website. Please stand by for further updates shortly.

The EIF guarantees will be supported by the EU budget under the European Fund for Strategic Investments (EFSI).

We will support projects that work towards halting the spread of COVID-19, finding a cure and developing a vaccine against the disease. We will also finance urgent infrastructure improvements and equipment needs in the health sector using existing framework loans or undisbursed amounts from existing health projects.

Find more information

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