Through EIF, the EU guarantees partially portfolios of micro-credit financing granted by financial institutions (Intermediaries) to very small enterprises. The risk-sharing arrangements established between EIF and each Intermediary aim to stimulate micro-lending.
Depending on the type of Intermediary and its activity, EIF can issue:
- Direct guarantees to Intermediaries that provide micro-credits directly to SMEs. EU Micro-Credit Guarantees partially cover portfolios of micro-credits issued to microenterprises.
- Counter-guarantees to Intermediaries that issue guarantees covering micro-credits extended by microfinance institutions. EU Micro-Credit Guarantees partially cover portfolios of such guarantees.
Main Product Features (applicable both to EU Guarantees and Counter-Guarantees)
- Guarantee rate: for each loan/guarantee in the portfolio, up to 75% of the Intermediary’s commitment.
- Guarantee cap: payments by EIF are capped at a pre-set amount, which is a percentage (known as “cap rate”) of the total amount covered by the EU Micro-Credit Guarantee. The cap rate is based on the expected cumulative net losses incurred by the Intermediary on the EU portfolio.
- Fees: EU Micro-Credit Guarantees are provided free of any charge.
- Guarantee maturity: for each micro-credit financing covered, 5 years from the date of the loan agreement.
- Micro-credit criteria:
- Borrowers: Micro-enterprises accordingly to the EU definition.
- Purpose of financing: investments and working capital.
- Minimum maturity: 12 months
- Maximum amount: EUR 25,000
How to become an intermediary?