First guarantee agreement signed by EIF under the new EU CIP programme

The European Investment Fund (EIF), the European Union’s financial body for SMEs (small and medium-sized enterprises), has signed a guarantee agreement with the Brussels-based Fonds de Participation (FdP) under the European Union’s (EU) Competitiveness and Innovation Framework Programme (CIP) SME Guarantee Facility.

FdP is an autonomous Belgian public institution whose mission is to provide subordinated loans to SMEs and loans to micro-enterprises which cannot obtain commercial loans from the traditional banking lending system.  The availability of this EU Guarantee represents the first such agreement signed by the EIF under the CIP.

The CIP, which spans from 2007 to 2013, has been put in place to boost European productivity, innovation capacity and sustainable growth, whilst simultaneously addressing complementary environmental concerns.

Within the framework of the CIP, the EIF has been allocated EUR 1.1bn to be split between venture capital – with the High Growth and Innovative SME Facility (GIF) - and guarantees – with the SME Guarantee Facility (SMEG).

Under the SMEG, financial institutions are encouraged to enhance access to finance for SMEs.  The facility offers an excellent tool to allocate additional financing volumes for those SMEs that would not otherwise have access to resources and financial engineering instruments because of the increased lending risk entailed.  As such, The SMEG complements and broadens EIF’s own product offering.

Richard Pelly, EIF’s Chief Executive said “We are very thankful to the European Commission for entrusting us with substantial financial resources and we are looking forward to our continued cooperation with Fonds de Participation.  This first CIP loan guarantee agreement is evidence of the EIF enduring support to European small businesses and contribution to the development and growth of the European economy”. The EU CIP SMEG Facility gives the EIF the opportunity to play an essential role in supporting sustainable job creation and entrepreneurship in European SMEs. 

About EIF

The EIF central mission is to support Europe’s small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

The EIF commitment in guarantees totalled over EUR 11.6bn in some 190 operations at end August 2008, positioning it as a major European SME guarantees and securitisation player.

 Since its activities began, the EIF has indirectly supported some 810,000 SMEs and has thus tremendously contributed to economic growth and development in Europe.

For further information, please contact David Yormesor d.yormesor@eif.org