Finnvera is joining the Pan-European Guarantee Fund (EGF) programme of the European Investment Bank (EIB) Group. On 1 April 2021, Finnvera and the EIB signed an agreement on a guarantee programme which will enable Finnvera to grant a total of EUR 650 million of working capital and investment loans, mainly for the financing needs of large enterprises. This funding will have a 75% EIB guarantee. The guarantee programme will be in force until the end of 2021.
The Pan-European Guarantee Fund (EGF) is made up of EUR 25 billion in guarantees by EU Member States, which are set to trigger additional investments of up to EUR 200 billion for European companies. The Fund was established in spring 2020 on the initiative of the EIB Group, which is also responsible for its management. Finnvera’s share of the Fund totals EUR 650 million.
“The agreement is excellent news for Finnish companies and especially for employees. By utilizing EU funding, we ensure the adequacy of companies' working capital during the Covid-19 pandemic and the advance of investments after the end of the pandemic. I'm especially happy for the good and long lasting cooperation between the European Investment Bank Group and Finnvera”, says Minister of Economic Affairs of Finland Mika Lintilä.
“The Fund supports companies during the coronavirus pandemic by securing their access to financing. This will give Finnvera better possibilities to fulfil its role as a complementary provider of financing on the financial markets and also enable large enterprises to benefit from the Pan-European Guarantee Fund”, says Jussi Haarasilta, Finnvera’s Executive Vice President.
The Guarantee Fund is intended for large and medium-sized enterprises which exceed the limits of the EU’s SME definition by having a staff headcount of 250 or more, an annual turnover of over EUR 50 million, and a balance sheet total in excess of EUR 43 million.
“The European Guarantee Fund is an opportunity for financial intermediaries and companies in all of Europe”, added EIB Vice-President Thomas Östros. “SMEs and larger companies alike have suffered under the economic fallout of the measures aimed at stopping the virus. Although the end of the pandemic is now slowly coming in sight, companies will need a lot of financing to get back on the path to sustainable and steady growth. We’re glad that we can count on Finnvera to help channel this European financing to the companies that need it.”
The loans under the guarantee programme will be provided directly by Finnvera. An individual loan amount may not exceed EUR 100 million, and the credit period is at maximum six years. The more detailed terms and conditions of the financing will be agreed upon individually for each project. In principle, the same terms and conditions will apply as to the company’s other financing.
The EGF programme will be valid until the end of 2021.
Finnvera reinforces the capacity and competitiveness of Finnish enterprises by offering loans, export credit guarantees and other guarantees and is prepared to secure the availability of lending to viable enterprises in all stages of the exceptional situation caused by the coronavirus crisis. Finnvera will continue the bank financing guarantee programme and also supplement the financial market with its direct loans. We recommend that companies contact their own banks about their financing needs, preferably at the earliest stage possible.
The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from Finland and other EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly EUR 25 billion in guarantees, the EGF allows the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity and other financial instruments available to mostly small and medium-sized enterprises. The EGF is part of the European Union’s recovery package aiming to provide a total of EUR 540 billion boost those parts of the EU economy that have been hit the worst.