InvestEU: More than DKK 110 million in EU funds for Danish small businesses

• Flex Funding secures EU guarantee of over DKK 110 million for small businesses in Denmark

Danish SME (small and medium-sized company) lendingplatform Flex Funding has signed an agreement with the European Investment Fund (EIF) for a guarantee of DKK 111.7 million through its vehicle Flex Garanti II ApS. The new agreement will ensure that up to 160 smaller Danish companies can more easily obtain funding with attractive terms so that they can continue their growth and development.

“We are noticing that the banks are turning down business customers to a greater extent. SMEs are the bedrock of our economy, and they need funding for growth and investment. Borrowing money from banks has become both more difficult and more expensive. There is therefore a great need for good alternatives," said CEO of Flex Funding Henrik Vad.

"Small and medium-sized enterprises are still recovering from the COVID-19 crisis but are faced with a multitude of new challenges, from inflationary pressures to supply chain disruptions and the economic fallout from the Russian invasion of Ukraine. It’s therefore very important that we are able, once again, to boost alternative financing channels, and help make financing more accessible for small Danish businesses," said Marjut Falkstedt, EIF Chief ExecutiveThe EIF will continue to closely monitor current developments and what effects they may have on European companies and Europe’s growth.

Specifically, this means that companies unable to provide sufficient security to borrow money can take part in the European Union’s guarantee scheme through Flex Garanti II ApS. In this way, the European Union guarantees the loan and takes on the risk. The EU guarantee corresponds to a state guarantee, giving the company a lower interest rate.

“If we get a customer who has been turned down by the banks, we can offer the guarantee and thus improve the situation for the borrower. Because the European Union provides the security, the risk is lower. This way, we can secure far better interest rates than companies can normally get,” says Henrik Vad.

This is the second time that Flex Funding has received a guarantee from the EIF, the first being a DKK 300 million guarantee received in 2021. So far, over 100 smaller Danish companies have benefited from the first round of EU support through Flex Funding.

One of them is whisky manufacturer Thornæs Danish Whisky, which borrowed DKK 1 million in 2021.

“Making whisky is very capital-intensive — especially at the beginning. Our business depends on us stocking up so that the whisky can mature for a number of years before it is ready for sale. This funding means that we have been able to continue producing and securing the value chain and that we can realise our long-term growth strategy,” said Founder and Managing Director of Thornæs Danish Whisky Torben Thornæs Andersen.

Flex Funding will benefit from a guarantee of up to 70%. The guarantee from the EIF is part of InvestEU, the purpose of which is to generate growth and mobilise investment in the European Union. The programme will run from 2021 to 2027 and aims to mobilise public and private investments of €372 billion through an EU guarantee of €26.2 billion channelled through partners such as the European Investment Bank (EIB) and other financial institutions. Flex Funding is the first Danish debt provider to have received the guarantee through the InvestEU SME Competitiveness Product – Higher Risk Category 3 portfolio.

Background information:

The purpose of the InvestEU programme is to create growth and mobilise investment in the European Union. The programme will run from 2021 to 2027 and aims to mobilise public and private investments of €372 billion through an EU guarantee of €26.2 billion channelled through partners such as the European Investment Bank (EIB) and other financial institutions.

The European Investment Fund (EIF) is part of the European Investment Bank (EIB). Its core mission is to support Europe’s micro, small and medium-sized enterprises (SMEs) by helping them access funding. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments that are specifically targeted at this market segment. In this role, the EIF promotes EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

The EIF was established in 1994 and is active in all EU countries, potential Member States, Liechtenstein, and Norway.

Flex Funding is a pioneer and the biggest crowdlending platform for SMEs in Denmark, brokering loans through its own brand and via white-label partners. Founded in 2013 and based in Copenhagen, the company is a market and technology leader within the fast-growing SME crowdlending market in Denmark. As a provider of SME funding, Flex Funding has developed its platform to meet the funding needs of Danish SME borrowers through lending from investors that are interested in this asset class.

By brokering business loans in this way, Flex Funding provides SMEs with access to highly attractive alternative funding options. At the same time, Flex Funding offers private and professional investors seeking attractive investment opportunities access to SME funding. The company’s core competencies include credit assessment, risk-based pricing, and administration of loans and payments.

Flex Funding receives fees for its services from both borrowers and lenders. Flex Funding has successfully brokered loans of more than DKK 300 million for more than 400 businesses and with the participation of more than 2 800 active lenders. Following a successful rollout in Denmark and increasing growth rates, Flex Funding’s strategy is to expand its Nordic presence. Establishment in Sweden is planned for early 2022.

Contacts:

EIB Group:                               Tim Smit, +352691286423, t.smit@eib.org

Mai Zeilund;                              +4571900523, mai@zeilund.com,

European Commission:           Flora Matthaes, +32460755148, flora.matthaes@ec.europa.eu

Flex Funding:                           Henrik Vad, +4526888900, henrik.vad@flexfunding.com