Investment Plan for Europe: EIF and KfW sign agreement to provide EUR 500m for German SMEs

The European Investment Fund (EIF) and the German promotional bank KfW have signed an agreement to increase lending to innovative small and medium-sized enterprises (SMEs) as well as Small Mid-caps, benefiting from the support of the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe

The new agreement allows KfW via on-lending banks to provide innovative companies in Germany with access to a total of EUR 500m of financing over the next 2 years. This InnovFin SME guarantee agreement enables KfW to offer innovative companies additional financing at favourable conditions, with the support of a guarantee provided by the EIF and backed under Horizon 2020, the EU Framework Programme for Research and Innovation.

EIB Vice-President, Ambroise Fayolle said: “Innovation is a key priority for the EIB Group and this deal demonstrates our commitment to financing innovative companies. The Investment Plan for Europe instrumental in enabling the EIB Group to boost support for SMEs and Mid-Caps in need of finance. KfW continues to be a crucial partner for us in Germany. By providing risk financing, we can help to strengthen the role of businesses both in Germany and across the European Union.”

Commenting on the signature, EIF Chief Executive, Pier Luigi Gilibert said: “I am pleased to be signing the InnovFin SME Guarantee agreement here in Berlin with our long-term partner KfW for the benefit of German businesses. Under previous agreements, KfW has supported many successful SMEs and I am convinced that together we can improve access to finance for even more innovative companies over the next two years”.

European Commissioner for Research, Science and Innovation Carlos Moedas said: "Germany is one of the leading EU Member States for innovation and I am pleased that it is dedicating more resources to financing innovative companies. The InnovFin SME Guarantee deal signed today with KfW Bankengruppe will open up new ways of funding innovative companies to enable them to grow and create jobs."

Dr Ingrid Hengster, member of the KfW Executive Board said: “Innovation fuels progress and competitiveness. Financing innovation entails a certain level of intrinsic risk. This risk is now being spread between the EU, the EIF, the financing partners and KfW, making it easier and more affordable for bold entrepreneurs to implement good ideas.”

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 the EIF

The European Investment Fund (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 8.8 billion 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 5.6 billion in over 350 operations at end 2014, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

About KfW

KfW is one of the world’s leading promotional banks. With its decades of experience, KfW is committed to improving economic, social and ecological living conditions worldwide on behalf of the Federal Republic of Germany and the federal states. To do this, it supplied funds totaling EUR 74.1 billion in 2014 alone; and of this, 36 % went into measures of protecting the environment and combating climate change. With the help of KfW, small and medium-sized enterprises can consolidate their businesses and invest in growth. KfW also offers special programmes for promoting innovative technology companies, the use of renewable energy and improving energy efficiency within companies. In 2014, KfW’s promotional business volume in the area of SME finance totalled EUR 19.9 billion.

www.kfw.de/europa

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 loan 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 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 billion 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 billion in investments in Research and Innovation across Europe.

More information:

Investment Plan for Europe - Q&A  

Press contacts:

EIF: David Yormesor
Tel.: +352 42 66 88 346, e-mail: d.yormesor@eif.org

KfW: Sonja Höpfner Tel.: +49 69 74314306, e-mail: sonja.hoepfner@kfw.de

European Commission: Annika Breidthardt Tel.: +322 295 6153, e-mail: Annika.breidthardt@ec.europa.eu