- Enhanced terms under the EaSI Guarantee Instrument to support micro- and social enterprises in response to COVID-19
- Call for Expression of interest launched today available for intermediaries with a potential outreach to thousands of individual micro-borrowers as well as micro and social enterprises
- The mandate has the backing of the Investment Plan for Europe.
The EIF and the European Commission are launching new COVID-19 support measures under the EaSI Guarantee Instrument (EaSI) to enhance access to finance for micro-borrowers, micro- and social enterprises.
The new measures will support micro- and social enterprises as well as individual micro-borrowers hit by the socio-economic consequences of the coronavirus pandemic. The objective of the new COVID-19 measures is to further incentivise financial intermediaries to lend money to small businesses, mitigating the sudden increase in perceived risk triggered by the coronavirus pandemic, and alleviating working capital and liquidity constraints of final beneficiaries targeted by the EaSI programme. Key features of these new measures include higher risk coverage, broadening of certain parameters, such as an increase of the maximum exposure for micro and social enterprises, and more flexible terms.
The new features will be accessible to financial intermediaries, that can potentially serve thousands of companies benefitting from guarantees under the EaSI Guarantee Instrument. To date, the guarantees provided by EIF to financial intermediaries operating in the micro and social finance space have unlocked c. EUR 1.4bn of debt financing, allowing more than 85,000 micro and social enterprises across Europe to access financing.
European Commissioner for Jobs and Social Rights, Nicolas Schmit, said: “Micro-enterprises and social enterprises, which often employ the most vulnerable in society, have been hit hard by the COVID-19 pandemic. Safeguarding their survival is essential for local economies and communities across the EU. Today’s measures will provide much needed support as part of EU recovery efforts, as we build a more resilient and inclusive Europe.”
EIF Chief Executive, Alain Godard said: “Many micro and social entrepreneurs are feeling the effects of the COVID-19 crisis and these new measures can play an important part in cushioning the blow. The support measures proposed will help financial intermediaries to boost lending activities and provide financing to small business owners, including the self-employed and social businesses, during the current economic crisis and its aftermath. These are the businesses that are typically hardest hit by severe economic downturns and we are keen to do everything we can to help.”
The EaSI Covid-19 Support Measures are made available to the market and rolled out based on an amended EaSI Call for expression of interest published on EIF website.
Financial intermediaries with existing EIF agreements under the EaSI Guarantee will be able to access the new terms of the guarantees upon their request.
Micro-borrower, micro and social enterprises will be able to apply directly to their local banks and lenders participating in the scheme, which will be listed on www.access2finance.eu.
The EIF does not provide financing directly to micro-entrepreneurs or social enterprises. Through the EaSI Guarantee Instrument, the EIF offers guarantees and counter-guarantees to financial intermediaries, thereby providing them with a partial credit risk protection for newly originated loans to eligible beneficiaries. Intermediaries are selected after an application under a call for expression of interest followed by a due diligence process. Once selected by EIF, these partners act as EaSI financial intermediaries, and start originating loans to eligible beneficiaries within the agreed availability period.
Today’s announcement follows up on theCommission’s commitmentof 13 March to bring much-needed relief to hard-hit enterprises.
The Commission and the EIB Group will continue to work on additional measures and will use all the tools at their disposal to help contain the coronavirus pandemic and address its economic consequences.
The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe’s micro, small and medium-sized businesses by helping them to access finance. EIF designs and develops both venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth and employment.
About the Programme for Employment and Social Innovation (EaSI)
The EaSI programme aims to support to financial intermediaries that offer microloans to entrepreneurs or finance to social enterprises. The objective is to increase access to microfinance for vulnerable groups who want to set up or develop their business and micro-enterprises, through notably loans of up to EUR 25 000 and social enterprises through investments of up to EUR 500 000. The microfinance and social entrepreneurship support is being implemented through three EU level instruments. The first one was the EaSI Guarantee scheme, launched in June 2015, which enables financial intermediaries to reach out to micro-enterprises and social enterprises that they would otherwise not have been to finance due to risk considerations. The second instrument, the EaSI Capacity Building instrument, was launched in 2016 with the aim of helping financial intermediaries develop their institutional capacity in order to grow and better serve micro- and social enterprises. Last but not least, the EaSI Funded instrument provides funding in the form of senior and subordinated loans to financial intermediaries in order to boost lending capacity. More information is available here.
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