The European Investment Bank (EIB) is lending EUR 100 million to SG Equipment Finance Czech Republic SRO (SGEF CZ), the leasing arm of Société Générale in the Czech Republic, to finance the projects of small and medium-sized enterprises (SMEs), mid-cap companies and municipalities.
This new type of loan is in line with the EIB’s priority of strengthening its support for Europe’s SMEs to help mitigate the effects of the current credit crisis. In this effort the Bank is simplifying its procedures and broadening the scope of financing by also covering intangibles. It is increasing transparency and working towards a more effective transfer of the advantage of EIB funds to the final beneficiary.
The loan will serve to co-finance small and medium-sized projects in the areas of industry, transport, environmental protection, energy and energy saving, infrastructure including health and education facilities, services, tourism and other projects enhancing the knowledge-based economy.
The EIB funds will finance projects usually implemented by SMEs (with fewer than 250 employees), midcap companies (with more than 250 and fewer than 3 000 employees) and local municipalities, and will improve their access to long-term finance. To these ends, the EIB is joining forces with well established financing institutions like SGEF CZ, which know the local market, have SMEs, midcap companies and municipalities as their customers and dispose of a well developed network and alternative distribution channels.
The current loan represents a continuation of the successful cooperation between the EIB and SGEF CZ. The EIB has previously provided two credit lines to this financial institution amounting to EUR 130 million in support of SME investment.
Background
The task of the EIB, the European Union’s financing institution, is to contribute to the integration, balanced development and economic and social cohesion of the Member States by financing sound investment
EIB loans to partner financial institutions have been developed as a successful tool for providing long-term funding for smaller projects with total costs of up to EUR 25 million. Since 1990, signed loan contracts in the Czech Republic have amounted to some EUR 10 billion out of which approx. EUR 1.2 billion (including the current loan) were funds to support SME and municipality investments in the country.