InnovFin SME Guarantee Facility
What is the InnovFin SME Guarantee?
InnovFin SME Guarantee is a guarantee or counter-guarantee on debt financing that the European Investment Fund (EIF) provides to financial intermediaries in order to improve access to finance for innovative Small and Medium-sized Enterprises (SMEs) and Small Mid-caps (enterprises with up to 3000 employees). Thanks to the InnovFin SME Guarantee, financial intermediaries – i.e. banks and other lending institutions, guarantee schemes or debt funds which are selected by the EIF can provide debt financing on favourable terms to innovative SMEs and Small Mid-caps in EU Member States and Associated Countries.
InnovFin SME Guarantee is part of the “InnovFin - EU Finance for Innovators” programme which is a joint European Investment Bank (EIB) Group and European Commission (EC) initiative under Horizon 2020, the EU framework for Research and Innovation (R&I) 2014-2020. InnovFin – EU Finance for Innovators offers a range of tailored financing products and advisory services to companies of different sizes ranging from SMEs to large corporations and other entities
Which companies does the InnovFin SME Guarantee support?
The InnovFin SME Guarantee supports:
- SMEs investing in the production or development of innovative products, processes and/or services that present a risk of technological or industrial failure; or
- SMEs and Small Mid-caps 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
- SMEs and Small Mid-caps 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.
For more information on eligibility, please consult: www.eif.org
Which products are eligible?
The following products are eligible:
- Loans, bonds and lease financing are eligible
- The purpose of financing can be investments (tangible or intangible assets), working capital or business transfers
- Both term and revolving facilities are eligible
- Amount: at least 25,000 EUR, up to a maximum of 7.5 million EUR
- Maturity: at least 1 year, up to a maximum of 10 years
- Currency: EUR and/or local currency
How does the InnovFin SME Guarantee work?
Under InnovFin SME Guarantee, EIF provides EU-supported guarantees or counter-guarantees to selected financial intermediaries to cover for potential losses on a portfolio of SME loans. The guarantee covers up to 50% of the loss on each new eligible loan, bond or lease that is originated typically during a two-year period. Thanks to the reduced credit risk and lower capital consumption achieved through the guarantee, EIF encourages financial intermediaries to extend new debt financing to innovative enterprises on more attractive terms. The guarantee is offered on favorable terms and financial intermediaries are therefore required to transfer part of the financial benefit to their clients.
What are the advantages of the InnovFin SME Guarantee?
- Attractive and fixed guarantee fees payable on the outstanding amount of the guarantee:
- 0.50% p.a. for debt financing to SMEs
- 0.80% p.a. for debt financing to Small Mid-caps
- The guarantee automatically covers 50% of the principal and interest losses on each exposure
- Payments will be made upon default, with a pro-rata sharing of recoveries
- No capital charge (0% Risk-Weighted Assets) for counterparty risk is required on the covered part of the loan portfolio thanks to EIF’s Multilateral Development Bank status
- InnovFin SME Guarantee is a flexible product which grants the financial intermediary a great degree of autonomy, e.g. the intermediary has full delegation on the origination, credit decisions, servicing, etc.
- Quarterly reporting requirements are designed in a pragmatic and lean way
Which Israeli financial intermediaries are active under the InnovFin SME Guarantee?
Companies interested in checking eligibility, may contact the Israeli intermediaries using the following contact information:
How to apply? (Financial intermediaries only)
The basis for selecting the InnovFin SME Guarantee partner institutions is an open Call for Expression of Interest which is published on EIF´s websiteInterested institutions can submit their applications, which will be assessed by EIF on a first-come, first-served basis. Interested financial intermediaries can find further information on how to work with the European Investment Fund on its website or by contacting the EIF by email InnovFin_SME_guarantees@eif.org
What is the guarantee amount per financial intermediary?
The guarantee amount is up to 200 million EUR per intermediary and up to 500 million EUR for an intermediary group. With a 50% guarantee rate, this means a maximum portfolio volume of up to 400 million EUR of financing per intermediary, and up to 1 billion EUR for an intermediary group.
For additional questions: Sarit.Kimchi@iserd.org.il