Professional Documents
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The EIB’s activity spans all economic sec- participations in 146 operations and derived from its ability to raise funds on
tors with few exceptions. Due to economic EUR 7.3 billion in the form of SME credit the capital markets at keen rates (AAA) and
considerations or ethical standards, guarantees, granted to around 114 banks long maturities. Intermediaries undertake
a few sectors or investment types are or specialist institutions. to inform the final beneficiaries and pass
excluded 2 from EIB eligibility. Moreover, on to them the advantages offered by EIB
in line with EU legislation, EIB operations Financing SMEs is a local business: SMEs credit lines. EIB funds are also attractive
adhere to regulatory restrictions in some need direct access to financial partners for their comparatively long maturities.
sensitive sectors. with high quality local and sector infor- Compared with access to other types of
mation who are able to monitor changing resources, EIB funds are also characterised
All projects financed by the EIB must com- demands closely and carry out appraisals by a high degree of versatility associated,
ply with Community legislation in the of proposed projects.
fields of competition, procurement and
environmental regulation. With around 1 300 staff, mostly based
in Luxembourg, the EIB is not equipped
The EIB’s SME financing has a tangible to deal directly with the thousands of There is an important SME
dimension. Between 2001 and 2005, SMEs spread throughout the EU. Instead, dimension to many EIB
nearly half (EUR 25.4 billion) of the through its global loans, it relies on a financing activities:
EUR 54.9 billion in global loans signed network of commercial banks that are in
by the EIB with some 200 partner banks direct contact with customers. Social and Economic Cohesion:
benefited SME investment projects. in 2005 global loans continued
The EIB’s interventions in favour of SMEs to cater for assisted areas: 66% of
Over the past five years, the EIF’s activities are therefore based on partnership with total signatures in the EU-25 and
63% in the EU-15.
in support of SMEs have translated into financial intermediaries, whereby the
EUR 2.13 billion of signatures for equity EIB provides improved financing terms Implementation of the Inno-
vation 2010 Initiative (i2i)3: one
pillar of i2i is support for entre-
2
Excluded from EIB financing or global loan financing are: (i) land acquisition; (ii) second-hand assets; (iii) war mate- preneurship by financing inno-
rial of any type; (iv) non-generated intangible assets such as patents acquisition; (v) current assets and operating
costs; (vi) tobacco industry and trade; (vii) gambling. Other sectors might be excluded in accordance with the EU vative SMEs and investing via
cooperation strategy for each country. the EIF in venture capital funds
providing innovative SMEs with
equity resources.
3
At the Lisbon European Council of March
2000, the European Union set itself the
strategic goal of establishing a competi-
tive, knowledge-based economy capable
of sustainable economic growth with more
and better jobs and greater social cohesion
by 2010. The EIB Group is a major player in
implementing the Lisbon agenda, in co-
operation with the European Commission.
The objective under its Innovation 2010
Initiative is to lend EUR 50 billion to foster
innovation over the current decade.
SME global loans generally target enter- to complement its traditional global ary, which generally assumes the final
prises with fewer than 250 employees for loans in Italy, Spain, France, Germany beneficiary risk, as in the case of global
investments of between EUR 40 000 and and Portugal. loans. Mid-cap financing can go up to
EUR 25 million, with loans of up to 50% 50% of eligible project costs for invest-
of eligible project costs, i.e. between Supporting firms as they ments usually between EUR 25 million
EUR 20 000 and EUR 12.5 million. Lower grow: a new EIB instrument and EUR 50 million, generally resulting
allocation limits can be applied in operations for mid-cap companies in loans of between EUR 12.5 million and
designed to support micro-enterprises. EUR 25 million. The procedures in place
In January 2005, the EIB adopted the Com- for approving projects financed by mid-
All global loan financing can be cumula- mission’s Recommendation5 setting new cap loans are streamlined and therefore
tive with other EU support instruments criteria for the definition of SMEs, which faster and better suited to the size of the
(e.g. grants) for SMEs or small-scale infra- notably resulted in a reduction of the projects than those applying to opera-
structure, but must comply with maxi- threshold from 500 to 250 employees. tions financed by a stand-alone direct
mum EU support ceilings. This new definition had the effect of wid- loan to final beneficiaries.
ening the bracket of medium-sized com-
Global loans can be deployed as tar- panies. To facilitate the financing of these In contrast to SMEs, the projects of mid-
geted instruments. To suppor t its companies, while also enabling other cap companies are not automatically eli-
primary objective of promoting invest- medium-sized companies to benefit from gible for EIB financing and must meet at
ment in less favoured areas, the EIB has EIB financing, the EIB has launched a new least one of the EIB’s lending priorities: in
set up global loans specifically aimed at product – mid-cap loans – designed for particular, economic and social cohesion,
assisted regions (e.g. the eastern Länder firms with more than 250 and fewer than i2i or environmental protection.
of Germany) or dedicated to specific 3 000 employees.
policy areas (e.g. the environment and Long-standing cooperation
R&D). The Bank has also carried out a This new instrument consists of a line of with the banking sector
number of securitisation operations credit granted to a financial intermedi-
The EIB’s banking partners must meet
stringent requirements in terms of finan-
cial soundness. When allocating EIB
4
Global loans may also be directed to the financing of small infrastructure projects, typically those of municipalities finance, they evaluate projects in accord-
or other local authorities, where the loan maturities offered by the EIB are particularly well suited to financing in this
sector. ance with contractual criteria laid down
5
The new definition of SMEs is laid down in Commission Recommendation 2003/361/EC of 6 May 2003 (OJ L 124,
20.5.2003, pag. 36). In accordance with Article 2 of the Recommendation, the Bank applies only the criterion of the
in liaison with the Bank and take on the
number of employees: fewer than 250 except in fields governed by the various rules on State aid. management of the loan. The lending
The European Investment Fund (EIF) is a and securitised loan and lease portfolios.
financing body of the European Union Counter-parties include banks, leasing ì""W orks to support key
established to support small and medium- companies, guarantee institutions and EU policies in favour of
economic growth and
sized enterprises, to increase their com- mutual guarantee funds.
employment in Europe;
petitiveness and to foster innovation and
technology in Europe. The EIF’s sharehold- The EIF provides technical assistance in ì""Promotes SME finance as
ers are the European Investment Bank these two areas on a fee basis for regional SMEs have the potential to
(62%), the European Commission (30%) bodies, development organisations and improve economic growth
and some 20 public and private financial the European Commission. and integration;
institutions (8%) from across the EU-25. ì""Supports innovation by
JEREMIE increasing overall invest-
EIF support for SMEs ment and private sec-
In October 2005, the EIB Group, the Euro-
E I F tor involvement in major
The EIF finances SMEs by taking stakes in pean Commission and the European Bank research and develop-
venture capital and private equity funds, for Reconstruction and Development ment projects;
in particular European high tech, early- (EBRD) jointly launched the JASPERS and ì""Makes investments on a
stage investments. JEREMIE initiatives. The aim of these pro- market basis in order to
grammes is to help beneficiary countries generate an appropriate
About 40% of the EIF’s investments are to utilise the structural and cohesion return;
early-stage and 56% are tech-related, funds and invest them in good projects,
ì""Carries out its activity in
primarily ICT and life sciences, while the and to increase access to finance in the
the 25 Member States
portfolio is balanced by buyout, develop- regions to encourage more business
and the Accession and
ment and generalist investments. start-ups and new ventures. Acceding Countries, plus
the EFTA countries under
The EIF also provides indirect support JEREMIE has a particularly important SME European Commission
to SMEs by guaranteeing and counter- dimension, being a process whereby the mandate.
guaranteeing portfolios of SME loans Member States and regions will be able to
These products will include equity, ven- ì""30/06/2009: the latest date by
which all projects must have
ture capital, guarantees, loans and tech-
reached completion;
nical assistance and will allow a multiplier
effect on the budget. For each euro ì""31/12/2009: the latest date by which
of budget, the sum of financing prod- the Preparatory Action facility will
ucts available could range from 2 to 10 terminate.
euros. The targeted SMEs will range from
life sciences start-ups to medium-sized
enterprises operating in more traditional
sectors of the economy.
Eligible projects
ì""Eligible SMEs must have majority pri- Activities eligible for TA include:
vate ownership and control, or be in
the final stage of privatisation. They ì""installation of management informa-
must not conduct business in the fol- tion systems specifically geared to
lowing areas: gambling, real estate, SME portfolios;
banking, insurance or financial inter- ì""training of PCI staff in supporting SMEs
mediation or the manufacture/supply and in the appraisal, supervision and
of (or trade in) arms, or activities on the administration of loans extended to
EIF’s or EIB’s exclusion lists. SMEs;