InnovFin SME Guarantee Facility
The InnovFin SME Guarantee Facility is established under the “EU InnovFin Finance for Innovators” initiative developed under Horizon 2020, the EU Framework Programme for Research and Innovation. It provides guarantees and counter-guarantees on debt financing up to €7.5 million in order to improve access to finance for innovative SMEs and mid-caps (up to 3,000 employees). The facility is managed by the EIF, and is rolled out through financial intermediaries – banks and other financial institutions – in EU Member States and Associated Countries which including Armenia, Georgia, Moldova, Ukraine. Under this facility, financial intermediaries are guaranteed by the EU and the EIF against a proportion of their losses incurred on the debt financing covered under the facility.
Objectives
- to improve access to finance for innovative small and medium-sized enterprises (SMEs) and mid-caps (up to 3,000 employees)
- to cover the growth needs of innovative enterprises
- to cover the financing of digitalization, support the uptake of digital technologies and digital transformation of enterprises
- to provide enhanced terms and conditions for guarantees and counter-guarantees to incentivize financial intermediaries to provide working capital financing to European SMEs and mid-caps hit by the economic impact of the coronavirus pandemic.
Beneficiaries
Thanks to the InnovFin SME Guarantee, financial intermediaries – i.e. banks and other lending institutions, guarantee schemes or debt funds that are selected by the EIF can provide debt financing on more favourable terms to innovative SMEs and mid-caps in EU Member States and Associated Countries, namely those:
- investing in the production or development of new or substantially improved products, processes and/or services with an increased risk of business, technological or industrial failure; or
- that are “fast growing enterprises”, i.e. their workforce or turnover has increased by at least 20% p.a. over the last 3 years; or
- that have a significant innovation potential or are R&I-intensive enterprises, i.e. satisfying at least one “innovation criterion” out of a set of pre-defined eligibility criteria; or
- investing in digital transformation in at least one “digitalisation area/criteria” out of a set of pre-defined eligibility criteria.
Activities
The InnovFin SME Guarantee Facility is deployed by eligible local banks, leasing companies, guarantee institutions, etc. which are selected after a due diligence process following the launch of a Call for Expression of Interest. Once selected by EIF, these local partners act as financial intermediaries.
EIF, acting for both EIF and the EU as the implementing body, covers a portion of the losses incurred by the financial intermediaries on loans, leases and guarantees up to EUR 7.5 million which they provide under the InnovFin SME Guarantee Facility. In this way, the EU and EIF allow the provision of more debt financing to innovative SMEs and mid-caps (up to 3,000 employees).
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