The European Investment Fund (EIF) and the German promotional bank KfW have signed an agreement to increase lending to innovative small and medium-sized enterprises (SMEs) as well as Small Mid-caps, benefiting from the support of the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe.
The new agreement allows KfW via on-lending banks to provide innovative companies in Germany with access to a total of EUR 500m of financing over the next 2 years. This InnovFin SME guarantee agreement enables KfW to offer innovative companies additional financing at favourable conditions, with the support of a guarantee provided by the EIF and backed under Horizon 2020, the EU Framework Programme for Research and Innovation.
European Commissioner for Research, Science and Innovation Carlos Moedas said: "Germany is one of the leading EU Member States for innovation and I am pleased that it is dedicating more resources to financing innovative companies. The InnovFin SME Guarantee deal signed today with KfW Bankengruppe will open up new ways of funding innovative companies to enable them to grow and create jobs."
European Investment Bank Vice-President, Ambroise Fayolle said: “Innovation is a key priority for the EIB Group and this deal demonstrates our commitment to financing innovative companies. The Investment Plan for Europe instrumental in enabling the EIB Group to boost support for SMEs and Mid-Caps in need of finance. KfW continues to be a crucial partner for us in Germany. By providing risk financing, we can help to strengthen the role of businesses both in Germany and across the European Union.”
Dr Ingrid Hengster, member of the KfW Executive Board said: “Innovation fuels progress and competitiveness. Financing innovation entails a certain level of intrinsic risk. This risk is now being spread between the EU, the EIF, KfW and the financing partners, making it easier and more affordable for bold entrepreneurs to implement good ideas.”
The aim of the InnovFin SME Guarantee is to encourage banks or other financial institutions to lend to SMEs and small mid-caps (firms with fewer than 500 employees) in need of investment and/or operating capital to finance research, development and innovation activities, with EU financial support. Financial institutions are being selected by the EIF following a call for expression of interest for financial intermediaries across Europe.