First InnovFin SME Guarantee agreements in Germany: EIF signs deals with L-Bank and Bürgschaftsbank Baden-Württemberg to finance innovative companies

The European Investment Fund (EIF) has signed agreements with L-Bank and Bürgschaftsbank Baden-Württemberg (BBW) to increase lending to innovative small and medium-sized enterprises (SMEs) as well as small Mid-caps under InnovFin – EU finance for innovators, an initiative supported by the European Commission.

The new counter-guarantee agreements allow L-Bank and Bürgschaftsbank Baden-Württemberg to provide finance to on-lending banks which will finance innovative companies in Baden-Württemberg in Germany for a total of EUR 57m and EUR 50m respectively, over the next two years with the support of a guarantee provided by the EIF and backed under Horizon 2020, the EU Framework Programme for Research and Innovation. These are the first InnovFin SME counter-guarantee signatures in Germany, enabling L-Bank and Bürgschaftsbank Baden-Württemberg to offer innovative companies additional financing at favourable conditions.

Guy Selbherr, CEO of Bürgschaftsbank Baden-Württemberg said: “Helping innovative SMEs to develop new products and services and to launch them successfully with an appropriate funding - that is our daily business. Especially the export-oriented economy is making a huge effort in innovations. The financial instrument InnovFin is very attractive: it offers a high 70 percent guarantee for financial institutions and is very flexible regarding the investment location, required collaterals or combined funding through a subsidized loan. With InnovFin we can now support export-oriented companies abroad, where they need us.”

“If we want to provide innovative companies with the top-quality support they need to develop new products and indeed, new kinds of products, we must adapt our financial instruments accordingly. With InnovFin, we are combining elements of our development finance programmes for Baden-Württemberg with EU resources, thereby benefiting our customers and creating a new quality standard for development finance,” commented Dr Axel Nawrath, Chairman of L-Bank’s Executive Board.

The aim of the InnovFin SME Guarantee is to encourage banks or other financial institutions to lend to SMEs and small mid-caps (firms with fewer than 500 employees) in need of investment and/or operating capital to finance research, development and innovation activities, with EU financial support. Financial institutions are being selected by the EIF following a call for expression of interest for financial intermediaries across Europe.

About InnovFin SME Guarantee

InnovFin SME Guarantee provides guarantees and counter-guarantees on debt financing of between EUR 25,000 and EUR 7.5 million, in order to improve access to debt finance for innovative small and medium-sized enterprises and small midcaps (up to 499 employees). The InnovFin SME Guarantee is implemented by the European Investment Fund, and will be rolled out through financial intermediaries (banks and other financial institutions) in EU Member States and Associated Countries. Under the InnovFin SME Guarantee, financial intermediaries will be guaranteed by the EIF against a proportion of their losses incurred on the debt financing. InnovFin SME Guarantee is part of InnovFin - EU Finance for Innovators, a new range of EIB Group (including EIF and EIB) products to facilitate access to finance for innovative businesses. This transaction is supported with the financial backing of the European Union under Horizon 2020 Financial Instruments.

About EIF

The European Investment Fund's (EIF) is part of the European Investment Bank group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total net commitments to private equity funds amounted to over EUR 8.8bn at end 2014. With investments in over 500 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF’s guarantees loan portfolio totalled over EUR 5.6bn in over 350 operations at end 2014, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

About Bürgschaftsbank Baden-Württemberg (BBW)

The Bürgschaftsbank Baden-Württemberg - the guarantee bank of the federal state of Baden-Württemberg, Germany – was founded in 1971 as a private support institute "by business for business". It is not profit-oriented. Its shareholders are Chambers of Commerce or Crafts and business federations of all sectors, credit institutions and insurance companies. The guarantee bank supports small and medium-sized companies (SMEs) as well as founders of new business enterprises. It grants guarantees of up to Euro 1.25 million for any type of short, medium- and long-term loans. In 2014 the guarantee bank of Baden-Württemberg supported about 2,300 companies. These guarantees secured loans of more than Euro 450 million.

About L-Bank

L-Bank is the development bank of the German federal state of Baden-Württemberg. The Bank provides finance for investments by Baden-Württemberg’s small and medium-sized enterprises (SMEs), for housing construction and modernisation, and for municipal infrastructure development projects. The Bank also provides financial and administrative support for social projects in the federal state. In the course of the Bank’s Enterprise Development activities in 2014, around 11,000 businesses were provided with funding totalling EUR 3.0 billion. To deliver this support, the Bank issues development loans, awards state subsidies, and provides guarantees and sureties. The Bank’s work focuses on a number of key objectives, including the use of financial instruments for assisting Baden-Württemberg’s SMEs to achieve sustainable growth and innovate. L-Bank also provides support for business activities that are not covered by traditional development programmes through an SME Fund for established businesses and a Venture Capital sub-portfolio for technology companies, as well as technology and business parks.

About Horizon 2020

On 1 January 2014, the European Union launched a new research and innovation funding programme called Horizon 2020. Over the next seven years almost EUR 80 bn will be invested in research and innovation projects to support Europe’s economic competitiveness and extend the frontiers of human knowledge. The EU research budget is focused mainly on improving everyday life in areas like health, the environment, transport, food and energy. Research partnerships with the pharmaceutical, aerospace, car and electronics industries also encourage private-sector investment in support of future growth and high-skilled job creation. "InnovFin – EU Finance for Innovators", the new generation of EU financial instruments and advisory services was developed under Horizon 2020 to help innovative firms access finance more easily. "InnovFin – EU Finance for Innovators" will help to inject up to EUR 48 bn in investments in Research and Innovation across Europe.

Press contacts:

EIF: David Yormesor, Tel.: +352 24 85 81346, e-mail: d.yormesor@eif.org

L-Bank: Cordula Bräuninger, Tel: + 49 721 150-1259, e-mail: cordula.braeuninger@l-bank.de

Bürgschaftsbank Baden-Württemberg: Gudrun Bergdolt, Tel: + 49 711 1645-703, e-mail: gudrun.bergdolt@buergschaftsbank.de