CIP Equity Guarantee Window

General Principle

Through EIF, the EU guarantees partially portfolios of equity or mezzanine financing granted by financial institutions (Intermediaries) to SMEs. The risk-sharing arrangements established between EIF and each Intermediary aim to stimulate the provision of equity and quasi-equity finance to SMEs, to help them improve their financial structure.

The Product

Depending on the type of Intermediary and its activity, EIF can issue:

• Direct guarantees to Intermediaries that provide finance directly to SMEs.EU Guarantees partially cover portfolios of mezzanine financing for SMEs.
• Counter-guarantees to Intermediaries that issue guarantees covering equity investments or mezzanine financing for SMEs.

Main Product Features (applicable both to EU Guarantees and Counter-Guarantees)

• Financing instruments covered:
  • Equity: Guarantees issued by Intermediaries covering equity investments in SMEs (equity investments made directly by the Intermediary are not eligible for cover).
  • Quasi-Equity: mezzanine finance extended directly to the SME by the Intermediary, or guarantees issued by the Intermediary covering mezzanine finance to SMEs.
• Guarantee rate: for each financing instrument in the EU portfolio, up to 50% of the Intermediary’s commitment.
• Guarantee cap: payments are capped at a pre-set amount, which is a percentage (known as “cap rate”) of the total amount covered by the EU Guarantee. The cap rate is based on the expected cumulative net losses incurred by the Intermediary.
• Fees: EU Guarantees are provided free of guarantee fees. However, in order to encourage full use of the available budget, commitment fees may be charged.
• Guarantee maturity: for each financing instrument covered, 10 years from its date.
• Investment/financing criteria:
  • Beneficiaries: SMEs as defined by the EU
  • Purpose of finance: seed, start-up and mezzanine finance
  • Minimum maturity: 12 months
  • Maximum investment/financing amount that may be covered by an EU Guarantee: EUR 500,000 per SME (the total amount of the investment or financing may be larger)