New initiatives for SMEs and mid-caps

The European Investment Bank has published the report EIB Operations Inside the EU 2017, EIB measures its success in terms of its contribution to EU policy, the quality and soundness of the projects it finances, and the technical and financial contribution it makes to each project.

In terms of SMEs and mid-caps, the latter constituted the EIB’s single largest public policy goal area in 2017 with EUR 15.6 billion for first signatures, representing 30% of all new EIB lending. This EIB financing is expected to support investments of at least EUR 42 billion which, in turn, should help sustain some 5.5 million jobs.

In addition to traditional intermediated loans to SMEs through local commercial banks, the Bank finances SMEs and midcaps through a range of innovative instruments, including risk sharing of guarantee portfolios, and equity and quasi-equity operations. The EIB’s own lending products are complemented by the European Investment Fund’s (EIF) specialised products for SMEs, including venture and growth capital, private debt, mezzanine finance, microfinance and social impact finance.

SME Initiative rollout

The SME Initiative is a joint financial instrument of the European Commission, the EIB Group and Member States. It aims to stimulate SME financing by financial intermediaries through the provision of partial risk cover for SME loan portfolios which they have originated. Alongside the European Structural and Investment Fund resources contributed by Member States, the SME Initiative is co-funded by the EU budget through Horizon 2020 and/or COSME resources, as well as EIB Group resources.

The participating Member States have entrusted the EIB Group with the implementation of the SME Initiative, for which the EIB provides senior risk cover, while the EIF provides upper mezzanine level risk coverage. In 2017, EIB Group continued to expand the initiative through participation in securitisations in Italy, with an overall commitment of EUR 142 million. The SME Initiative has been deployed in six Member States: Italy, Romania, Bulgaria, Malta, Spain and Finland.

The lack of access to finance for the SME & mid-cap segment is considered a structural market failure with important differences according to geography, business segment and financing type. As the EU economy returns to growth, access to finance is generally improving and EIB policy focus is progressively oriented also towards complementarity with transversal dimensions of SME and mid-cap finance such as innovation and climate action.

2017 has seen significant product developments, intended to adapt to the needs of both the Bank’s network of financial intermediaries and the policy expectations of EU stakeholders:

  • the EIB defined a simplified set of eligibility criteria, and a modus operandi, for the appraisal and monitoring of dedicated, targeted, innovation/digitalisation, multi-beneficiary intermediated loans (MBILs). Since July 2017, EUR 0.5 billion has been signed through five loans for SME operations in this field;
  • a similar dedicated approach was adopted for MBIL operations with specific climate action windows. A pilot phase targeted deployment of MBILs with financial intermediaries in several geographical regions that had already shown good results in targeting climate action investments. As a result, the MBIL operations signed during the year for a total of EUR 1.9 billion are expected to generate a contribution of some EUR 774 million, or 42% of the total signed amount.

For further information: EIB Operations Inside the EU 2017