Extra €150 million to help small businesses get loans for
research, development and innovation
Brussels, 22 January 2013
The European Commission is contributing a further €150 million from the seventh research framework programme to an initiative with the European Investment Bank (EIB) Group to encourage lending to innovative businesses. The Risk Sharing Instrument (RSI), managed by the European Investment Fund (EIF), combines EU budget money and EIF resources to guarantee a share of a financial-intermediary's lending to small and medium-sized enterprises and mid-cap companies that perform research and innovation. As well as an increase in resources, the Commission and EIB Group have also agreed to extend the scope of the initiative with a new counter-guarantee scheme.
"The Risk Sharing Instrument is an excellent example of how the EU budget can make a difference to small and medium-sized firms. The pilot initiative is already helping to mobilise €700 million in lending for companies to invest in research and innovation, in order to develop their businesses and create jobs. With this agreement we will now be able to offer even more support." said European Commissioner for Research, Innovation and Science, Máire Geoghegan-Quinn.
EIF Chief Executive Richard Pelly said: "We are pleased to be managing an additional €150m to benefit innovative SMEs and mid-caps across Europe, especially given the high demand we have seen for the pilot programme in the last few months. We have identified a number of new countries for future RSI agreements to be signed in the coming weeks and I am certain that this EU support will be crucial in helping to support economic growth and innovation across Europe.”
RSI is a pilot guarantee scheme to support the financing of R&D and/or innovation-driven SMEs and small Mid-Caps. It aims to encourage financial intermediaries to provide loans, leases and guarantees to SMEs and small mid-caps undertaking research, development or innovation, and seeking finance for investments and/or working capital. The value of the guaranteed loans and leases are between €25,000 and €7.5 million.
Guarantee agreements have already been signed in Austria (UniCredit Bank Austria), Czech Republic (Česká spořitelna), The Netherlands (ABN Amro), Spain (Bankinter), Ireland (AIB) and Italy (Banca Popolare and CR Cento).
The RSI was launched by the European Commission and EIB Group in December 2011 at the Innovation Union Convention. It is supported by the European Union under the Seventh Framework Programme for Research and Technological Development (FP7). The increased budget more than doubles the RSI capacity and will allow for deals with a larger number of intermediaries. The new agreement also opens up the possibility for promotional banks and guarantee societies to offer so-called counter guarantees to their partner financial institutions in the EU and countries associated to FP7.
The RSI is part of and complements the Risk Sharing Finance Facility, which has so far supported almost €10 billion euro in EIB loans, mainly to larger companies.. The new agreement should make it easier in future for EIB to provide RSFF loans to universities and medium and large midcaps, defined as companies between 500 and 3000 employees (full-time equivalent).
If the EU is to reach its target of investing 3% of its GDP in research, it needs to boost private sector investment in R&D and innovation. An important pre-condition for achieving this is mobilising finance. However, financial markets and institutions are often reluctant to back research- or innovation- intensive companies or projects due to the relatively high levels of uncertainty and risk inherent in their activities. The RSFF, launched in 2007, was a direct answer to this challenge. It improves access to debt financing for promoters of research and innovation investments by sharing the underlying risks between the EU and the EIB.