Offer for financial institutions
Financial institutions (banks, leasing companies, loan funds, guarantee funds and investment funds) may apply for the role of national financial intermediaries of the EU framework programmes for years 2014-2020. From August 2014, further guarantee and equity instruments are launched to improve access to financing for the European entrepreneurs. Information on the participation of financial institutions in the system of implementing financial instruments of the EU programmes is available at the National Contact Point.
Current offer for financial institutions
The Cosme Programme
- As a part of the Credit Guarantee Facility (Loan Guarantee Facility, LGF) of the COSME programme, the European Investment Fund provides portfolio guarantees for financial institutions offering financial products for small and medium-sized enterprises.The facility also includes counter-guarantees, i.e. the EIF guarantees to the guarantee institutions that subsequently provide guarantees to financial institutions offering products for SMEs, and guarantees for securitization of debt portfolios for SMEs. The EIF guarantees under the LGF to cover 50% of losses in capital and interest, incurred by the financial intermediary in respect of a single transaction and up to 20% of the portfolio covered by the contract (cap rate).
- The LGF instrument guarantees may cover debt financing for businesses that meet the definition of SMEs used by the European Commission, i.e. employing up to 250 persons, with a turnover not exceeding EUR 50 million or with the balance sheet total up to EUR 43 million.Financing may be allocated to investments in fixed assets (tangible and intangible) or working capital and must be granted for a minimum period of one year.The maximum guarantee period is 10 years.The maximum value of the EIF guarantee within one transaction concluded by the intermediary with the entrepreneur is EUR 1.5 million.The guarantees are free of charge for both financial intermediaries and entrepreneurs using preferential financing.
- Within the Facility for Growth Capital (Equity Facility for Growth, EFG) of the COSME programme, the EIF offers equity financing for investment funds making venture capital investments (venture capital, mezzanine) in small and medium-sized companies in their expansion or growth phase.The funds – the financial intermediaries of the EFG instrument – will operate on a commercial basis, ensuring that financing is targeted at SMEs with the highest growth potential. The EIF financing covers between 7.5% and 25% of the financial intermediary’s capital, with the maximum value of EIF financing per intermediary not exceeding EUR 30 million.The EIF investments cover the period from 5 to 15 years.
Both financial instruments of the COSME programme were launched on 4th August 2014. The recruitment of candidates for financial intermediaries is continuous and lasts until 2020.
Horizon 2020 programme
- InnovFin SME Guarantee is a guarantee instrument of the Horizon 2020 programme, improving the availability of debt financing for innovative enterprises up to 500 employees. The principle of operation is similar to the LGF instrument in the COSME programme: the EIF provides guarantees or counter-guarantees to financial institutions offering financial products for SMEs and “Small Midcaps” (enterprises beyond the definition of SMEs with less than 500 employees). The guarantees may cover loans or other forms of debt financing with a value from PLN 25 thousand up to EUR 7.5 million. The financing may relate to investments (tangible assets, intangible assets), working capital and the transfer of an organized part of the enterprise, on condition that these must be new contracts (without refinancing existing liabilities). The financing may be used by entrepreneurs who meet at least one of the dozen or so contractual innovation criteria defined by the EIF (e.g. fast growth, holding patents, participation in innovation support programs, investments in research activities).
- The guarantees cover up to 50% of potential losses (including the principal and interest) of the financial intermediary for individual financing agreements.The guarantee is of a portfolio nature and is not limited (there is no cap rate).The guarantee cost for the financial intermediary on an annual basis amounts to 0.5-0.8% of the EIF’s current guarantee exposure.The intermediary is obliged to reduce the price of financing offered to enterprises which are the final beneficiaries of the instrument.
- Recruitment for financial intermediaries of the instrument was announced on 4th August 2014 and it will continue until 2020. The first Polish intermediary offering financing under the facility InnovFin SMEG is Idea Bank (current offer of Polish financial intermediaries).
- The second guarantee instrument of Horizon 2020 is InnovFin Midcap Guarantee. The aim of the instrument is to improve access to financing for innovative enterprises employing up to 3,000 persons which, due to the amount of the necessary funding or staffing levels, are not eligible to benefit from the SME Guarantee InnovFin. Under the Facility, the European Investment Bank provides portfolio guarantees covering up to 50% of the potential losses of financial intermediaries with regard to the funding provided. The guarantee is not limited (there is no cap) and it is payable to the broker. The value of transactions covered by the guarantee may range from EUR 1 million to EUR 50 million.
- The selection procedure for candidates acting as the Facility’s financial intermediaries was announced on 28th May 2015 and will last until 2020.
- InnovFin Equity is an equity instrument under which the EIF provides funding for Investor VC funds, business angels, technology transfer vehicles, social impact funds and funds of the fund. EIF-supported entities are innovation-oriented and invest in enterprises in their early stage of development. The EIF finances up to 25% (and in special cases up to 50%) of the capitalization of the funds. It can also capitalize on multi-stage funds investing both in the early stages of development and in the expansion as well as the growth phase of enterprises.
- The facility was launched on 15th June 2015. The EIF is awaiting offers from fund managers until 30th September 2020.
Employment and Social Innovation Program “EaSI”
- Within the EaSI Mirofinance Guarantee, the European Investment Fund offers portfolio guarantees for financial institutions that grant micro-loans (debt financing up to EUR 25,000) intended for setting up or developing micro-enterprises (employing up to 9 persons, whose turnover or balance sheet value does not exceed EUR 2 million). ). The guarantee will cover up to 80% of the potential broker’s loss, and it is limited to 30% of the portfolio. Financing may be allocated to costs related to the establishment or development of micro-enterprises, i.e. investments, working capital, acquisition of licenses, etc. An intermediary using the guarantee is obliged to make financing available to micro-enterprises on a preferential basis, e.g. by offering an extended financing period, reducing the financing price, lower security requirements etc. Under EasI, EIF also offers guarantees for financing social enterprises. The parameters of the guarantee are analogous to those for microfinance, while the value of the guaranteed financing granted to a social enterprise is up to EUR 500,000.
- The warranties under the EaSI program are free of charge.
- The selection process of candidates for the Facility’s Financial Intermediaries was announced by the EIF on 24th June 2015 and will run until 2023. The EaSI guarantee instruments offer will be supplemented by counter-guarantees for microfinancing and for the financing of social enterprises. In addition, loans and equity financing will be available to financial institutions granting micro-loans.
Program Creative Europe
The Creative Europe programme offers a portfolio guarantee for financial institutions which provide financing to entrepreneurs and institutions from the cultural and creative sectors. The EIF guarantee covers up to 70% of the broker’s loss, with a cap of 10, 18 or 25% of the portfolio value. The guarantee may secure financing up to EUR 2 million.
Detailed content of the Calls for Expression of Interest, including instrument parameters and application procedure (in English):
- COSME Loan Guarantee Facility
- Horizon 2020 InnovFin SME Guarantee
- Horizon 2020 InnovFin MidCap Guarantee
- EaSI Microfinance Guarantee & EaSI Social Entrepreneurship Guarantee
- Cultural and Creative Sectors Guarantee Facility (CCS GF)
Detailed information on application procedures is available at the National Contact Point for Financial Instruments of the EU Programmes. The NFP also offers free workshops for financial institutions – candidates for intermediaries of financial instruments of the EU programmes.
At the end of 2013 the possibility of applying for the role of intermediaries of financial instruments expired for the following EU framework programmes covering years 2007-2013: the Framework Programme for Competitiveness and Innovation (CIP) and the 7th Framework Programme of the European Community for Research, Technological Development and Demonstration Activities.
Along with the announcement of recruitment for Guarantees for Microfinance in the EASI Programme (in June 2016) the availability of the guaranteees within the Progress Microfinance Facility ended.