EIB loans for SMEs: a welcome ray of light in the current economic gloom
- May 4, 2010
In 2009, the EIB made EUR 12.7bn available in credit lines to intermediary banks for on-lending to small businesses, an increase of 55% compared with the year before. The Bank reached more than 50 000 SMEs across the EU. Focus on five SME success stories to take stock of the situation.
In 2009, the EIB's new SME policy was implemented on a large scale and the rapid growth continued with a 55% increase in signatures of intermediated loans for SMEs, following on from a 43% rise the year before. With loans totalling EUR 20.8bn signed with intermediary banks during 2008 and 2009, the EIB is well on its way to meeting the target of lending EUR 30bn to SMEs between 2008 and 2011 laid down in the European Economic Recovery Plan, which was adopted by the Heads of State or Government in December 2008. In 2008 the EIB had already made its "Loans for SMEs" product simpler and more transparent in order to facilitate lending to SMEs through its partner banks.
In France, Laboratoires Prodene Klint, an innovative SME, was the first European company to benefit from these new loans for SMEs. This company, which has 230 employees and is based in the Marne Valley, received a EUR 180 000 loan from BNP Paribas to buy some equipment for developing a skin disinfectant for use in medical (in the prevention of nosocomial infections) and industrial environments. With a production site near Annecy for its cosmetics division and two production sites in the Paris area for its skin hygiene and disinfection division, Laboratoires Prodene Klint is rapidly growing. It operates internationally, via subsidiaries in Germany, North America and the Maghreb region and via a network of special partners in the rest of the world.
In France, the EIB's partners are the Banques Populaires, Caisses d'Epargne, Crédit Agricole, Crédit Mutuel, Crédit Industriel et Commercial, Crédit Coopératif, Société Générale and Oseo Financement. Through these banks, French SMEs received EUR 950m from the EIB in 2009.
Investing in innovation is crucial to a company's success
In Italy, the 100 year old family owned Cartiera dell'Adda, located near Lecco and producing packaging paper and cardboard received a EUR 2.5 m EIB loan in 2009 intermediated by Mediocreval S.p.A.. The company, which employs 58 and is one of the leading and technically advanced SMEs in its sector, used the EIB loan to purchase new equipment to increase production capacity by 20% with the same level of fixed costs, improve product quality and add a new higher value added paper product to its portfolio. Hence, the new equipment has opened up new markets for the company potentially expanding Cartiera's sales by 40%, increasing its profitability by 70% and in spite of the economic downturn which has severely affected the sector the promoter has managed to keep up its sales with no negative impact on employment.
The increase in production capacity has resulted in a higher level of outsourcing, which in turn is supporting other SMEs in related sectors such as paper-cutting companies. The CEO has no doubt that technical innovation is the key to the continuity and development of the company especially in the current financial and economic downturn and comments that "Mediocreval understood the company's technical competencies and managerial ability and was willing to offer financial support, which is scarce in the present economic climate and without which the planned investments and technological innovations of 2009 would not have been possible".
Recruiting despite the crisis
Still in Italy, Trafileria A. Mauri e figli S.p.A. of Lecco, another family-owned company, with 98 employees, operating in the field of cold steel processing, mainly for the automotive sector, also received a EUR 4m EIB loan for SMEs intermediated by Mediocreval in 2007. The loan helped it to invest in new machinery and expand its warehouse from 800 m2 to 3 200 m2, plus an external area of 1 500 m2) in the town of Casalecchio Di Reno, near Bologna.
The investment strengthened the company's presence in the Emilia-Romagna region market and enhanced its commercial potential. The CEO of the company recognised the crucial role of this loan during an economic downturn: "Thanks to this investment, it was possible to increase the volume sold in Emilia-Romagna. We also increased our labour force in the warehouse from five to seven, despite the downturn that severely affected the entire metal-working industry during 2009 as well as our particular sector."
In Italy, the EIB works with over 20 banking partner groups to finance SMEs. EUR 4,000m financed 25,000 SMEs over the period 2008 to 2009 and new loans for SMEs for EUR 2,500 m were signed in 2009.
In Portugal, the company DT2 New Concept received a EUR 800 000 EIB loan intermediated by Caixa Geral de Depositos (a long standing partner of the EIB for SME financing) for the construction of facilities at Marinha Grande, for the acquisition of equipment (milling machines, etc.) and for major investment in hardware and software. Marinha Grande is a city in the centre of Portugal where an important and innovative cluster of the moulds industry is located. DT2 New Concept aims to be a pioneer in Portugal in its core business of manufacturing small runs of plastic and metal items. To achieve that goal, it uses the "rapid manufacturing" process, which enables significant reductions in price and delivery times because there is no need to design and manufacture specific production tools. In terms of employment, this project finance has definitely been a success, as it created 21 jobs. In the last two years, the EIB has allocated more than EUR 450m per annum to SME projects in Portugal through 8 intermediary banks: Caixa Geral de Depósitos, Banco Português de Investimento, Banco Espirito Santo, Millennium bcp, Banco Santander Totta, Montepio Geral, Banco Popular Portugal and BBVA.
Enlargement countries also on board
Further east, in Turkey, Doganer Alci received a EUR 6m loan from the intermediary bank TSKB (Turkish Industrial Development Bank) in 2008 for a EUR 8.5m project to finance the expansion of the company. EUR 2m of the loan was disbursed from EIB funds for investment in the company's new plasterboard facility. This project was financed under the SME Development Global Loan signed in Luxembourg on July 2007.
Thanks to this investment, 32 jobs have been created and the plasterboard facility now has an annual production capacity of 12 million m2. The company's CEO Durak Dogan shared his enthusiasm: "We are very grateful to TSKB, which has supported us and our country's economy in its capacity as intermediary, and also to the EIB, which provided the funds." TSKB has indeed been playing a significant role in the development of Turkey over the last fifty years by supporting, in collaboration with the EIB, a great number of Turkish infrastructure projects. In 2009 alone, the EIB provided EUR 1 510 million for SMEs in Turkey.