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Access to finance

Loan Guarantees

Bank building

To help small businesses obtain loans from banks, guarantees - provided by public, private or mutual guarantee institutions - can help compensate for a lack of collateral or creditworthiness on the part of small businesses by reducing banks' risks.

The EU is working to increase the potential for guarantees to improve small-business access to finance. Since 1998, about 360 000 small businesses have benefited from the guarantees provided by the European financial instruments.

Currently, a guarantee facility is available to small businesses under the Competitiveness and Innovation framework Programme (CIP) for the years 2007 to 2013.

A group of guarantee experts produced a report on good practices and made recommendations concerning the use of guarantees.

Success story - Supporting expansion abroad

One company supported by the European Commission through the SME Guarantee Facility is Softimus, a Lithuanian furniture design and production company. Set up in 2003, it experienced very fast growth, expanding into Latvia, Poland and the UK. However, the start-up began to experience cash-flow problems due to this fast expansion. Without a 50% guarantee made possible by EU funding, the company would not have been granted working capital finance from a commercial bank. The firm is continuing to expand and has created 12 new jobs, bringing the number of staff to 34.

If you want to know more details, please watch the video "Access to finance: closer to SMEs".

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