Austrian Vice-Chancellor Wilhelm Molterer met EIB President Philippe Maystadt and the EIB Vice-President responsible for lending in Austria, Matthias Kollatz-Ahnen, today to discuss ways of improving Austrian small businesses’ access to long-term finance.

Supporting small and medium-sized enterprises (SMEs) is one of the EIB’s core priorities. Since September 2008, at the request of the EU Council of Finance Ministers (ECOFIN), the European Investment Bank Group has been strengthening and updating its product offering for SMEs in the EU Member States in order to provide them with effective support in the current financial crisis and give them access to long-term finance for their investment projects on favourable terms.

By 2011, EUR 30bn will be pumped into small businesses throughout Europe, including EUR 15bn in 2008 in 2009 alone.

Since Austria joined the EU in 1995, the Bank has granted loans worth EUR 3.7bn for SME projects in the country via commercial banks – around one third of total EIB lending Austria.

With its so-called “global loans” the EIB has since 1995 been successfully cooperating with a constantly growing number of Austrian partner banks (now ten) in financing SMEs in Austria and Europe-wide. These banks are then able to onlend the EIB funds to their small business customers at favourable rates through their branch networks.

The new generation of “EIB loans for SMEs” provides in certain cases for risk-sharing by the EIB designed to reach market segments that commercial banks are unwilling to enter – such as the SME sector where the risk profile is too high or the security provided is thought to be inadequate.

With EIB loans for SMEs, up to 100% (compared to 50% before) of individual SME projects  can now be financed, including intangible as well as tangible investment and working capital. The aggregate new SME portfolios of partner banks must be at least twice as big as the EIB refinancing. EIB loans for SMEs can support all types of investment or expenditure necessary to grow a small business. The investment can therefore be:

  • tangible, i.e. the purchase of plant or real estate. In principle, the purchase of land is ruled out unless it is vital for the investment while the purchase of agricultural land is totally excluded.
  • intangible, such as the financing of expenditure directly related to research and development, building up or taking over distribution networks, including in another EU Member State, the filing or acquisition of patents or the costs incurred in the transfer of an enterprise enabling the continuation of economic activity (where the buyer and the enterprise up for sale are SMEs and the amount required to finance the transfer does not exceed EUR 1m).
  • the permanent increase in working capital required to develop an expanding SME.

The EIB is currently holding intensive talks with its Austrian partner banks with a view to removing the obstacles to SME financing.