European Guarantee Fund of €25 billion (COVID-19 response)
Summary
Budget
Official information source
https://www.eib.org/en/about/initiatives/covid-19-response/index.htmDescription
European Guarantee Fund of €25 billion
The EIB Group created EGF, a €25 billion fund, in response to COVID-19. This guarantee fund enables the EIB Group – in partnership with local lenders and national promotional institutions – to scale up its support to small and medium-sized companies (SMEs) and others in the real economy by mobilising up to €200 billion, in addition to the support package announced already.
EGF is now operational, following guarantees by EU Member States accounting for at least 60% of EIB’s capital.
As of May 2021, EGF has already approved €11.7 billion, almost half the fund’s target for 2021, in support of European businesses struggling with the economic fallout of the COVID-19 pandemic. The initiatives financed so far are expected to generate €93.9 billion in funding for the EU economy. Find out more
EIB President Werner Hoyer commented: “The EIB Group was among the first off the mark in ensuring Europe helped businesses and citizens deal with the economic fallout of the COVID-19 crisis. Our main effort with EGF is to support EU companies and providing the financing they need to survive the pandemic. These figures show that Europe’s response is making a real difference in record time. They add to the EIB Group’s track record in financing the research and development of treatments and vaccines, which today bring us light at the end of the COVID tunnel.”
The EIB Group has also proposed a financing package that will go towards bridging loans, credit holidays and other measures designed to alleviate liquidity and working capital constraints for SMEs and mid-caps. The EIB Group, including the European Investment Fund, which specialises in support for SMEs, will work through financial intermediaries in the Member States and in partnership with national promotional banks.
The financing package consists of:
- Dedicated guarantee schemes based on existing programmes for immediate deployment. A €1 billion guarantee tranche will mobilise up to €8 billion of SME financing.
- Dedicated liquidity lines to banks to ensure additional working capital support for SMEs and mid-caps of €10 billion;
- Dedicated asset-backed securities (ABS) purchasing programmes to allow banks to transfer risk on portfolios of SME loans, mobilising another €10 billion of support.
All these actions can be implemented quickly to ease liquidity shortages and will be executed in partnership with national promotional banks wherever feasible.
A green and sustainable recovery
The EIB Group remains open for business while taking good care of its employees and business partners. Both the EIB and EIF closely monitor the economic impact of the COVID-19 crisis on their portfolio and the operations of their underlying companies. We continue to rigorously support investment in a green and sustainable recovery for Europe.
Coronavirus outbreak: EIB Group’s response
On April 16 the EIB Board of Directors meeting approved the EIB Group’s response to economic effects of COVID-19 crisis: a €25 billion European guarantee, whose goal is to deliver up to €200 billion for the European economy. The Board decision follows the Eurogroup’s recommendation to include the EIB’s proposal into the joint EU response package.
Mobilising billions for the economic recovery
A protection shield
The European Investment Bank will set up a protection shield for European companies. The economic and financial dynamics immediately ahead of us are approaching a tipping point: we have very little time left to put in place any measures to safeguard the European economy from this unprecedented shock.
The EIB Group is creating a pan-European guarantee fund of €25 billion. This guarantee fund will enable the EIB Group – in partnership with local lenders and national promotional institutions – to scale up its support to SMEs, mid-caps and corporates in the real economy by mobilising up to €200 billion, in addition to the support package announced already.
How will the guarantee fund work
Who can benefit?
How, where and when can companies apply for these funds?
Additional to the emergency measures already announced on 16th March 2020
An immediate response to the crisis
To counteract this unprecedented shock, the EIB Group has proposed a financing package that will go towards bridging loans, credit holidays and other measures designed to alleviate liquidity and working capital constraints for SMEs and mid-caps. The EIB Group, including the European Investment Fund, which specialises in support for SMEs, will work through financial intermediaries in the Member States and in partnership with national promotional banks.
The financing package consists of:
- Dedicated guarantee schemes based on existing programmes for immediate deployment. A €1 billion guarantee tranche will mobilise up to €8 billion of SME financing.
- Dedicated liquidity lines to banks to ensure additional working capital support for SMEs and mid-caps of €10 billion;
- Dedicated asset-backed securities (ABS) purchasing programmes to allow banks to transfer risk on portfolios of SME loans, mobilising another €10 billion of support.
All these actions can be implemented quickly to ease liquidity shortages and will be executed in partnership with national promotional banks wherever feasible.
A comprehensive response to the pandemic outside the EU
The EIB Group has announced details of a comprehensive response to the coronavirus pandemic outside the EU that will provide up to €5.2 billion in the coming months. This financing is part of the Team Europe response and supported by guarantees from the EU budget. It will both strengthen urgent health investment and accelerate long-standing support for private sector investment that reflects financing needs in more than 100 countries around the world.
The immediate fast-tracked support will help to sustain jobs and livelihoods in sectors most threatened by the economic and social impacts of the coronavirus, and will be followed by additional long-term health and business financing as needed.
Our support in a nutshell:
- Accelerated financing and targeted technical assistance for partners in 100 countries as part of the Team Europe response package
- Short-term support for health and business investment in Africa, Eastern and Southern Neighbourhood Countries, Western Balkans, Asia and Latin America
- Increased backing for business impacted by the pandemic
COVID-19 and digitalisation
In the fight against the Coronavirus, digital technology is playing an unprecedented role in the maintenance of daily life and economic and social activities, as well as the recovery of industries and business activities. The Coronavirus pandemic could become a tipping point for digitalisation - a dawn of a new era - by accelerating the maturity of digital technology: What was once a nice to have could now become a crucial to have.
In this context, we have published the report “Who is prepared for the new digital age? Evidence from the EIB Investment Survey”.
- Discover the main findings or download the report
Get support
Find out how you can get support for SMEs, mid-caps and healthcare infrastructure
- Support for SMEs and mid-caps
- Support for healthcare
For SMEs and mid-caps looking for finance
- Intermediated lending: Find out how the EIB and its partners can help your business
- Direct lending for mid-caps: Discover what the EIB can offer
We will be publishing the list of EIF intermediaries for COVID-19 related financing support on EIF’s dedicated page as soon as the relevant financing agreements have been concluded.
Meanwhile you can check here the EIF’s current network of financial intermediaries in your country.
For financial institutions willing to partner with the EIB Group
Please visit our dedicated pages for the main product categories:
Calls for loan portfolio guarantees to intermediaries under EU programmes COSME LGF and InnovFin SMEG has been published on EIF website. Please stand by for further updates shortly.
The EIF guarantees will be supported by the EU budget under the European Fund for Strategic Investments (EFSI).
