Page 38 - Annual Report 2010

ANNUAL REPORT 2010

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by the already committed budget. With many financial institutions tightening their credit policies post crisis, the CIP SME Guarantee Facility played an even more crucial

role in addressing the dif ficulties that SMEs face in obtaining access to debt finance. At end-2010, EIF had signed CIP agreements with 27 intermediar-ies in 15 countries and the large major-ity (more than 90%) of the supported SMEs were micro-enterprises and 57% of them were in the start-up phase.

The CIP SME Guarantee Facility has achieved a substantial leverage on the allocated budget of approximately 18 times the guaranteed loan amount, i.e. EUR 1 of budget allocation supports EUR 18 of SME loans.

The 2010 transactions present a lower leverage than previous years due to the higher expected default levels resulting from the financial crisis. In this environment, CIP intervenes with higher budgetary allocations to provide higher loss coverage, thus supporting lenders to continue to finance SMEs.

European Commission resources

The SME Guarantee Facility (SMEG) under CIP, which EIF is managing for the EC, aims to enhance access to finance for SMEs throughout the EU, in Iceland, Norway and Liechtenstein, as well as in Croa-tia, FYROM, Montenegro, Serbia, and Turkey. The SME guarantee is made available to CIP intermediaries as a free of charge guarantee covering part of the first loss (i.e. the expected losses) of a por t fol io of new SME loans. To qualif y for such a cover, financial institutions commit to of fer enhanced access to finance for SMEs by taking SME risk exposure which is additional to what they would usually

accept through, e.g. reduced collateral requirements, increased loan volumes or lending to hitherto excluded SME segments (like, for instance, start-up enterprises). The intermediary retains, typically, 50% of the first loss in the guaranteed portfolio.

Throughout 2010, EIF cont inued to deploy the pro-gramme’s guarantee instruments with a total of more than 90 000 SMEs having already benefited from the CIP guarantees. It is expected that a total number of ap-proximately 120 000 SMEs will be supported over time

Supported loan volume in the first 3 years of operations (as of 31 December 2010)

EURm 2008 2009 2010

Guarantee commitments 75.3 115.6 96.1 Guaranteed loan volume 1 309 2 299 1 187

90000

SMEs have benefited from CIP guarantees so far