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business & partnerships

130 000 SMEs supported through CIP SMEG

the resources allocated to us by the European Commission (EC) or, in the case of microfinance, also the EIB, and “own risk” transactions where we deploy our own capital.

Guarantee mandate activity

EIF manages the SME Guarantee Facility (SMEG) on behalf of the EC, as part of the CIP programme. The budget allocated to SMEG for 2007-2013 amounts to EUR 550m. The programme aims to enhance access to finance for SMEs and foster their productivity and innova-tion, particularly those which may typically encounter difficulties in be-ing granted a loan, especially in the post-crisis era where many banks have tightened their credit policies.

Under the SMEG, the EC through the EIF guarantees and counter-guarantees part of the loss a bank

or a guarantee institution may incur on their SME loans or lease port-folio. In this way, financial interme-diaries are encouraged to increase their lending volumes. This guaran-tee is provided to the intermediary free of charge. To qualify for such cover, financial institutions have to demonstrate that they offer en-hanced access to finance for SMEs by taking more risk than they would usually take, such as, for example,

To date, a substantial multiplier effect of 17 times the EC budget allocation has been achieved; in other words for each euro from SMEG, 17 euros worth of SME loans have been made available.

At year end 2010, EUR 4.5bn out of EUR 6.9bn of loan volumes from CIP SMEG available until 2013 had been utilised.

Guarantee own risk activity

We also employ our own capital to credit enhance tranches of SME loans or lease securitisation transac-tions placed on the capital markets (“own risk” transactions). EIF guaran-tees senior and/or mezzanine tranch-es of risk, typically with a minimum rat-ing equivalent to BB/Ba2  7 , aiming to support new SME financing. Guaran-tee volumes will be typically between EUR 25m and EUR 150m per deal.

Through this activity, EIF facilitates SME credit risk transfer from the financial institutions to the capital markets. EIF therefore shares the SME portfolio risk through portfolio or note guarantees and enables fi-nancial institutions to obtain liquidity

EUR 1.5bn of new securitisation commitments between 2008 and mid-2011

7  According to rating agencies’ standards.

by reducing their collateral require-ments, increasing their loan volumes or lending to SMEs they would not normally lend to (start-ups for exam-ple) . SMEG offers a broad range of products addressing SME needs, e.g. guarantees covering loans, microcredit, equity and quasi-equity and securitisation transactions.