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#EFSI Investment Plan supports medical research, digital innovation and small businesses

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The ESFI Investment Plan continues to deliver. Over the last week, the Plan's European Fund for Strategic Investments (EFSI) has backed finance for digital innovation in Sweden, access to finance for small businesses in Poland and medical research in Austria. The European Investment Bank (EIB) is providing Swedish software developer inRiver with €8 million in financing to invest in research and development, expand its market reach and grow its customer base.

The European Investment Fund (EIF) and national promotional bank Bank Gospodarstwa Krajowego (BGK) are doubling the size of their loans to Polish SMEs to PLN 2 billion (ca. €500 million). The loans are expected to reach close to 10,600 small businesses and entrepreneurs across Poland. The EIB is providing €25 million of financing to Austrian biotech company Apeiron Biologics to support the development of new pharmaceutical products to treat cancer, particularly a rare type affecting children.

This is the second medical research project to be signed in recent weeks, after the EIB agreed a €35 million loan to German medical device company MagForce to support the development of a new approach to treating brain tumours. This new approach makes it possible to combat the tumour from within, while sparing surrounding healthy tissue. All of these agreements were made possible through the support of the Investment Plan for Europe, the so-called Juncker Plan.

European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said: "These transactions demonstrate the diversity, quality and impact of the investments made possible by the European Fund for Strategic Investments. Whether it is through supporting medical research projects or helping small businesses access the finance they need to expand and create jobs, the Investment Plan is delivering real results across the EU. A final agreement on the extension and reinforcement of the EFSI will allow it to do even more. Therefore we look forward to a swift conclusion to the negotiations by the co-legislators." The Investment Plan is now expected to trigger over €225 billion across Europe. For the latest figures country-by-country, see here.

EU

#EIB: European Investment Bank to support Brexit Loan Scheme for Irish businesses

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Minister for Business, Enterprise and Innovation, Heather Humphreys T.D., Minister for Agriculture, Food and the Marine Michael Creed T.D., Minister for Finance and Public Expenditure and Reform Paschal Donohoe T.D. and EIB Vice President for Ireland, Andrew McDowell today opened the Brexit Loan Scheme for applications to allow for the roll out of €300 million in funding to eligible Irish businesses. The Scheme was launched at the Liffey Trust in Dublin’s inner city.

Eligible businesses can now apply for the Scheme through the participating finance providers: the Scheme is open through Bank of Ireland and Ulster Bank, with AIB following in June. The first step for businesses will be to complete the eligibility criteria for the Scheme on the SBCI website.

EIB Vice President for Ireland Andrew McDowell said: “The Brexit Loan Scheme today demonstrates the European Investment Bank’s commitment to the Irish SME market and we are delighted to be partnering with SBCI in Ireland to target innovative Irish SMEs. This €300 million joint scheme with SBCI to address Irish companies’ working capital challenges, bears testament to the EIB Group’s strengthened support to enable new investment by thousands of companies across Ireland at a time of uncertainty relating to Brexit.”

Speaking at the launch, Minister Humphreys said: “Coming from a business background, I am acutely aware of the challenges that Brexit poses to firms. This €300m Brexit Loan Scheme is one of a number of supports that the Government has put in place to help companies prepare.”

“The Scheme will provide much-needed finance to eligible business impacted by the UK’s decision to leave the European Union. I am confident that it will make a real difference to firms, enabling them to adapt, change and innovate. This, in turn, will help them to become more competitive, a fundamental trait in any resilient business,” Humphreys added.

In last October’s budget, €14m was secured by the then Minister for Business, Enterprise and Innovation, together with €9m by the Minister for Agriculture, Food and the Marine, for the Brexit Loan Scheme. The Department of Agriculture, Food and the Marine’s share of funding ensures that at least 40% of the fund will be available to food businesses.

Minister Creed said: “The Food Wise 2025 strategy outlines the agri-food sector’s unique and special position within the Irish economy and its potential for future growth. Brexit is obviously a significant challenge given our unique exposure to the UK market. Food businesses will need to focus on competitiveness and innovation in order to continue the growth in Irish agri-food exports, which reached a record €13.6 billion in 2017. I am pleased to launch this important Scheme today, for which my Department’s funding ensures that at least 40% of the €300m will be available to food businesses.”

The scheme will be open to eligible businesses with up to 499 employees from today, and has the potential to benefit over 5,000 companies.

Minister Donohoe said: “I welcome the launch of the Brexit Loan Scheme, which I announced in Budget 2018.  The Government recognizes the importance of the SME sector to the Irish economy and the potential risks that Brexit will bring to this sector. This Scheme is designed to assist SMEs with their short term working capital needs, supporting them in preparing for the challenges that may lie ahead. It will give SMEs time and the financial support to make the necessary changes to help ensure that their businesses remain competitive so that they can continue to grow into the future.”

Earlier this year Ministers Humphreys, Creed and Donohoe signed a counter guarantee agreement backed by the European Commission through the European Investment Fund (EIF), which is part of the European Investment Bank Group (EIB), so that the €23m secured in Budget 2018 can be leveraged to provide €300 million to Irish businesses affected by Brexit.

The scheme will be delivered by the SBCI. It’s CEO Nick Ashmore said: “Today’s launch in conjunction with the European Investment Fund (EIF), Minister for Business, Enterprise and Innovation and the Minister for Agriculture, Food and the Marine, will provide support to enable eligible businesses impacted by Brexit to have the working capital needed to innovate and diversify, to find new markets, and to grow into the future. This is an important next step for the SBCI as it deploys further risk sharing capacity by building on the success of last year’s Agri Cashflow Support Scheme and the Credit Guarantee Scheme to enhance access to finance for Irish businesses.”

The new EIF support for business investment in Ireland is backed by the European Fund for Strategic Investments and the EU InnovFin Finance for Innovators programme. This Scheme is supported by the InnovFin SME Guarantee Facility, with the financial backing of the European Union under Horizon 2020 Financial Instruments and the support of the European Fund for Strategic Investments (EFSI).

About the Brexit Loan Scheme

The Brexit Loan Scheme, which was announced in the 2018 budget will provide affordable financing to businesses that are either currently impacted by Brexit or will be in the future. The Scheme, which will be delivered by the Strategic Banking Corporation of Ireland (SBCI) through commercial lenders will make €300m available to eligible businesses with up to 499 employees at an interest rate of 4% or less.

Loan features:

  • Loan amount from €25,000 up to a maximum of €1,500,000;
  • loan term of up to three years;
  • loans less than €500,000 will be unsecured, and;
  • interest rate of 4% or less.

Loans can be used for:

  • Future working capital requirements to fund innovation, change or adaption the business to mitigate the impact of Brexit.

This Scheme is supported by an agreement with the EIF, and SBCI have signed to support lending toward innovative small and medium-sized enterprises (SMEs) as well as small Mid-caps under InnovFin – EU finance for innovators, an initiative supported by the European Commission. This agreement allows SBCI to provide guarantees to lenders financing innovative companies in Ireland for a total of €300m over the next two years with the support of a counter-guarantee provided by the EIF and backed under Horizon 2020, the EU Framework Programme for Research and Innovation. This is the first InnovFin SME counter-guarantee agreement in Ireland, enabling SBCI to enhance innovative companies’ access to funding at favourable conditions.

About EIF

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 (SMEs) by helping them access finance. EIF designs and develops 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. More information on EIF's work under EFSI is available here.

About the Strategic Banking Corporation of Ireland (SBCI)

As Ireland’s promotional financial institution, the SBCI’s goal is to ensure access to lower cost longer term funding for Irish SMEs by facilitating the provision of:

  • Lower cost funding to finance providers, the benefit of which is passed on to SMEs and which enhances competition in the SME lending market;
  • risk-sharing and guarantees that enhance access to finance for SMEs and farmers and that address specific market failures, and;
  • sourcing and delivering EU funding.

All of these elements create a more competitive and dynamic environment for SME finance. The SBCI is a vital part of the country’s financial architecture. By taking a fresh approach to providing access to lower cost finance for SMEs in Ireland, the SBCI is actively supporting the long-term potential of the sector to drive economic growth and create jobs.

About the Juncker Plan

The Investment Plan for Europe, the so-called Juncker Plan, is one of the European Commission's top priorities. It focuses on boosting investments to create jobs and growth by making smarter use of new and existing financial resources, removing obstacles to investment and providing visibility and technical assistance to investment projects.

The European Fund for Strategic Investments (EFSI) is the central pillar of the Juncker Plan. It provides a first loss guarantee, allowing the EIB to invest in more, often riskier, projects. The EFSI is already showing concrete results. The projects and agreements approved for financing under the EFSI so far are expected to mobilize more than €194 billion in investments and support over 426,000 SMEs across all 28 member states.

About InnovFin

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 of between €25,000 and €7.5m in order to improve access to loan finance for innovative small and medium-sized enterprises and small mid-caps (up to 499 employees). The facility is managed by EIF and is rolled out through financial intermediaries – banks and other financial institutions – in member states and Associated Countries. Under this facility, financial intermediaries are guaranteed by the EU and EIF against a proportion of their losses incurred on the debt financing covered under the facility.

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Economy

#Eurozone economy outlook tepid, #ECB near its limit: Reuters poll

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The outlook for the eurozone economy remains stable but lacklustre, a Reuters poll showed, suggesting that for now, the main risks emanating from the UK's vote to leave the European Union are confined to British shores, writes .

To cushion the blow from the 23 June Brexit vote, the Bank of England last week chopped interest rates to a record low and restarted its asset purchase program and is expected to ease further, putting pressure on the European Central Bank to follow suit with more easing. [ECILT/GB]

But there is scant confidence among economists that the ECB has much firepower left after its so far unsuccessful attempts to bring inflation back to its target of close to 2%.

The ECB has spent many billions of euro in asset purchases - now €80 billion per month - for over a year, has offered cheap long-term loans to boost lending and has chopped its deposit rate below zero, to -0.4%.

Still, the latest poll of over 60 economists showed inflation is forecast to average just 0.3% this year, 1.3% next, and is not expected to reach the ECB's target until 2019 at the earliest.

While those predictions are not very different from last month's poll, nor from inflation forecasts taken before the ECB began quantitative easing, the range of forecasts showed lower highs as well as lower lows.

Growth projections were not very different either, with lower lows.

After a good start to the year, the eurozone economy lost momentum and gross domestic product growth is now expected to average 0.3% per quarter until early next year and then average 0.4% until the end of 2017.

"Our forecasts imply that the slack in the euro zone economy, which had started to erode, will persist for longer than we - and the ECB - had expected," wrote Paul Mortimer-Lee, global head of market economics at BNP Paribas, in a note.

"Rather than Brexit, this will be largely down to the fading of some of the temporary factors that boosted growth this year."

The poll showed the ECB would keep its negative deposit rate unchanged until end of 2017, with only a handful of economists expecting a further cut.

With pressure to ease policy further, the central bank is widely expected to extend its monthly asset purchases program to beyond its original plan of conducting them to March 2017.

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Economy

#EuropeanInvestmentBank and #FundingCircle announce groundbreaking £100 million investment into UK small businesses

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EIB copyThe European Investment Bank (EIB) today (20 June) agreed a £100 million investment in loans to UK small businesses originated through Funding Circle, the world’s leading marketplace for business loans. This investment, alongside £25m from the Funding Circle SME Income Fund, will enable more than £200m of new loans over seven years, and provides a further injection of much-needed funding into the UK small business sector.

This new partnership with Funding Circle represents the first deployment of EIB funding through a direct lending marketplace to support small businesses. Improving access to finance for small- and medium-sized businesses is a key priority for the European Investment Bank. This new engagement is recognition of the role of marketplace lending as an efficient way for small business to access finance, and an important new channel to stimulate the real economy.

To date, Funding Circle has facilitated more than £1.25 billion of loans to 16,000 businesses in the UK. Since launching in 2010, lending to small businesses through Funding Circle has evolved to include a diverse range of investors. This includes national and local government backing in the UK and support from international organisations such as the European Investment Bank and European Investment Fund, and KfW, the German development bank.

“Investment by small businesses drives economic growth, and simple, efficient access to finance is essential to help small companies to expand, create jobs and harness new opportunities. This new and exciting partnership with Funding Circle demonstrates the European Investment Bank’s firm commitment to seeking out new ways to stimulate business investment across Europe. The £100m backing will not only unlock over £200 million of new investment by small businesses across the UK, but also provides an innovative model for supporting SMEs that could be used elsewhere in Europe,” said EIB Vice President Jonathan Taylor.

CEO and co-founder of Funding Circle Samir Desai said: “Our partnership with the European Investment Bank is the first of its kind and represents another important step on our journey to creating a global marketplace where creditworthy businesses borrow from a diverse range of investors. This significant investment will ensure more businesses access the finance they need to grow and will help support economic growth and job creation across the UK.”

By linking supply directly with demand through Funding Circle’s marketplace, the European Investment Bank will provide much-needed funding to UK small businesses. Currently, there are more than 5.4 million small businesses in the UK accounting for 99.3% of all private sector business. Collectively small businesses make up 50% of GDP and 60% of employment.*

Launched in 2010, Funding Circle is helping to spark a global revolution in the way small businesses access finance, disrupting the traditional model of banking. Funding Circle’s proven model enables businesses to access finance in a matter of days, directly from investors who can earn high, stable returns.

Through Funding Circle, businesses typically access the capital they need in seven days compared to 15-20 weeks with a bank. Independent research has found that three in four businesses would come to Funding Circle first in future, ahead of a bank.

Over the past decade, the European Investment Bank, Europe’s long-term lending institution, has provided more than £3bn for investment by small businesses across the UK.

*Federation of Small Businesses

 

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