InvestEU: EIF helps IBB expand loan programme for innovative SMEs

Date: 24 April 2024

Investitionsbank Berlin has taken out a counter-guarantee with the EIF
The €24.5 million guarantee was made possible by the InvestEU programme, and will enable IBB to support SME financing of up to €50 million via local banks

Investitionsbank Berlin (IBB) will ramp up cooperation with regional on-lending banks targeting small and medium-sized enterprises (SMEs) in the Berlin area, thanks to a counter-guarantee of €24.5 million provided by the European Investment Fund (EIF). With this backing, IBB can expand its promotional loan programme Berlin Innovativ PLUS with up to €50 million in additional liability releases for local banks. The financing will give SMEs access to affordable loans for investment in innovation, digitalisation, sustainability and the creative sector.

The EIF is the small business financing arm of the European Investment Bank (EIB). EIF counter-guarantees are made possible by the InvestEU programme, through three guarantee products: the Cultural and Creative Sectors Guarantee, the Innovation and Digitalisation Guarantee, and the Sustainability Guarantee.

The EIF Cultural and Creative Sectors Guarantee supports companies investing in areas like restoration, libraries, the press, architecture, performing arts and audiovisual.
The EIF Innovation and Digitalisation Guarantee helps regional financial institutions fuel the growth of SMEs working on research and development, and adopting new digital technologies.
The EIF Sustainability Guarantee promotes the green, sustainable transformation of the economy and the uptake of environmentally friendly, green and inclusive investments by small businesses.

The transaction was signed on the IBB’s funding day for SMEs in Berlin, which fosters innovation, climate neutrality, energy efficiency and sustainability among Berlin-based companies.

99% of Germany’s 3.4 million companies are SMEs, with 250 or fewer employees and €50 million or less in annual turnover. These companies provide 56% of the country’s jobs.

Nicola Beer, EIB Vice-President overseeing EIB financing in Germany, said, “The EIB Group is the European partner for the German Mittelstand. Our support, provided by the EIF through IBB, will enable local and regional banks to finance SMEs. These companies often face challenges when negotiating for innovative, sustainable or creative projects with commercial banks, which require collateral — in the form of a guarantee, for example. This counter-guarantee operation thus supports the SME sector, which provides 56% of jobs in Germany, letting them contribute more to the green and digital transition.”

EIF Chief Executive Marjut Falkstedt explained, “The InvestEU programme aims to boost investment by small, innovative companies, helping them navigate a difficult business environment of high interest rates and inflation. We are very happy to be partnering with IBB through the InvestEU programme to support smaller businesses, innovative companies and firms in creative and cultural sectors.”

Hinrich Holm, Chairman of the Board of IBB, remarked, “We look forward to continuing our successful cooperation with the EIF, and are pleased to be one of its first partners in Germany to conclude an SME portfolio guarantee from the InvestEU programme. This agreement will boost cooperation with our regional bank partners and broaden the focus of our improved loan product, Berlin Innovativ PLUS, by including the creative sector and sustainability criteria. Financial instruments with public and private participation are an efficient means of financing young and innovative businesses with high growth potential but a higher perceived risk.”

Franziska Giffey, Berlin State Senator for Economy, Energy and Enterprise, stated, “Berlin has positioned itself as an internationally competitive innovation hub and startup hotspot. Together with IBB, we have focused our business support activities on SMEs in the technology clusters, the digital economy and the creative sector. These innovative and dynamic enterprises are key to meeting the social and environmental changes and challenges facing our capital. Through its risk-sharing approach, InvestEU helps us to leverage more private investment for the transition to a sustainable, climate-neutral Berlin economy.”

Background information

The EIF is part of the EIB Group. Its central mission is to help Europe’s SMEs access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments that specifically target this market segment. In this role, it fosters EU objectives in support of innovation, research and development, entrepreneurship, growth and employment.

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It also helps mobilise private investments for EU policy priorities, such as the European Green Deal and the digital transition. The InvestEU programme brings together under one roof the multitude of EU financial instruments currently available to support investment in the European Union, making project financing simpler, more efficient and more flexible. It consists of three components: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. The InvestEU Fund is implemented through financial partners that invest in projects using the EU budget guarantee of €26.2 billion. The entire budget guarantee will back these projects, increasing the partners’ risk-bearing capacity and mobilising at least €372 billion in additional investment.

Investitionsbank Berlin is the business development bank of the Federal State of Berlin and a wholly owned subsidiary of the IBB Group. IBB provides low-interest loans, guarantees, equity investments and grants to improve economic, ecological and social living conditions in Berlin, and thereby advance sustainable development. It primarily targets startups, SMEs and innovative enterprises in Berlin’s technology clusters. In addition to business development, IBB supports housing and urban development as well as labour market promotion.

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Note: Following the recent withdrawal of the United Kingdom from the European Union, we are updating the relevant EIF.org pages.

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