The European Commission has actually unlocked EUR1 billion from the European Fund for Strategic Investments (EFSI )that will act as an assurance to the European Mutual Fund (EIF), part of the European Financial Investment Bank (EIB) Group. This will permit the EIF to provide unique guarantees to incentivise banks and other loan providers to supply liquidity to at least 100,000 European SMEs and small mid-cap companies hit by the economic impact of the coronavirus pandemic, for an estimated offered financing of EUR8 billion.
The EUR1 billion opened from the EFSI under the COSME Loan Guarantee Center and the InnovFin SME Guarantee under Horizon 2020 enables the EIF to offer warranties worth EUR2.2 billion to monetary intermediaries, unlocking EUR8 billion in offered funding. The guarantees will be used to the market through a call for expressions of interest released by the EIF on the 7th April to several hundred monetary intermediaries, consisting of banks and alternative loan providers. Key features of these assurances will be:
- Simplified and quicker access to the EIF guarantees;
- A greater risk cover– up to 80% of prospective losses on private loans (instead of the basic 50%);
- Focus on working capital loans across the EU;
- Allowing for more flexible terms, consisting of postponement, rescheduling or payment holidays.
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