The EIB Group created the Pan-European Guarantee fund (EGF) in response to COVID-19 of €25 billion. This guarantee fund enables the EIB Group – in partnership with local lenders and national promotional institutions – to scale up its support to small and medium-sized companies (SMEs) and others in the real economy by mobilising up to €200 billion, in addition to the support package announced already.
The Pan-European Guarantee Fund (EGF) is now operational, following guarantees by EU Member States accounting for at least 60% of EIB’s capital.
EIB President Werner Hoyer commented: "I’m delighted that in just 3 months we’ve developed a powerful pan-European instrument with which the EU Bank can help Europe recover from the terrible impact of COVID-19. A warm thank you to our institutional partners, national governments, and the Bank’s own staff. The real work starts now: getting the finance to companies, especially SMEs, who are the life blood of our economies and face devastating, unprecedented challenges. Europe is responding with strong, swift measures underpinned by solidarity and cooperation."
How does the guarantee fund work?
The €25 billion guarantee fund will be funded by EU Member States pro rata to their shareholding in the EIB and/or other institutions.
Thanks to the guarantee, the EIB Group will be able provide existing products to local banks and other financial intermediaries, who are in close contact with businesses in all Member States and can unlock financing to the real economy, without risking financial instability.
The guarantee will support different types of operations of the European Investment Bank, and its subsidiary, the European Investment Fund.
By guaranteeing parts of portfolios, our operations under the guarantee fund will free up capital for the financial intermediaries involved to make more financing available.
- At least 65% of the financing is earmarked for SMEs (companies with up to 249 employees).
- Up to 28%: loans and guarantees will go to non-SME companies with 250 or more employees, with restrictions applying to companies with more than 3 000 staff. Up to 5 % can be used for public sector companies and entities active in the area of health or health-research or providing essential services related to the health crisis.
- Up to 7% can be allocated to venture and growth capital (through the EIF) and venture debt for SMEs and mid-caps (companies with up to 2999 employees).
The guarantee fund will provide guarantees to the EIB and EIF to reimburse any possible losses incurred for included operations. By pooling credit risk across all of the European Union, the overall average cost of the fund will be significantly reduced, compared to national schemes.
The use of the EIB also means that all Member States will benefit from the sharing of the bank’s top-level credit rating.
Who can benefit?
The guarantee fund is designed to primarily support businesses, with a focus on SMEs, in EU Member States that are high-risk but viable in the long-term and, in the absence of the COVID-19 pandemic, would meet a lender’s or other financial intermediaries’ requirements for commercial financing.
How, where and when can companies apply for these funds?
Most of the financing will be made available through financial intermediaries in all the EU countries; that means either through commercial banks or National Promotional Institutions. Once the funds are available, companies can file requests with the participating banks and intermediaries. This list will be available on eib.org.
A majority of the funding made available will likely be requested by companies in the hardest-hit Member States and most heavily affected sectors. Ceilings and floors for the largest and smallest countries benefiting from the fund’s activity will apply, thus providing for a balance in the allocations.
The EIB Group is working very hard for the funds to become available as soon as possible and is fast-tracking the decision-making process. The Fund will be formally established when Member States representing 60% of EIB capital will have their contribution agreements signed.
A green and sustainable recovery
The EIB Group remains open for business while taking good care of its employees and business partners. Both the EIB and EIF closely monitor the economic impact of the COVID-19 crisis on their portfolio and the operations of their underlying companies. We continue to rigorously support investment in a green and sustainable recovery for Europe.
The EIB Group has also proposed a financing package that will go towards bridging loans, credit holidays and other measures designed to alleviate liquidity and working capital constraints for SMEs and mid-caps. The EIB Group, including the European Investment Fund, which specialises in support for SMEs, will work through financial intermediaries in the Member States and in partnership with national promotional banks.
The financing package consists of:
- Dedicated guarantee schemes based on existing programmes for immediate deployment. A €1 billion guarantee tranche will mobilise up to €8 billion of SME financing.
- Dedicated liquidity lines to banks to ensure additional working capital support for SMEs and mid-caps of €10 billion;
- Dedicated asset-backed securities (ABS) purchasing programmes to allow banks to transfer risk on portfolios of SME loans, mobilising another €10 billion of support.
All these actions can be implemented quickly to ease liquidity shortages and will be executed in partnership with national promotional banks wherever feasible.
The EIB Group has €6 billion available for investments in the healthcare sector. This is available for medical infrastructure, further research, or other vaccine- and cure-related financing. Since the EIB Group would finance or guarantee parts of projects, it is expected that this €6 billion would mobilise an even higher figure in supported investments.
Additional funding could go to healthcare infrastructure, further research or financing for vaccines and cures. We are also working on making another €5 billion available for coronavirus support to countries outside the EU - both to support healthcare infrastructure, as well as to maintain access to finance for impacted SMEs.
The EIB Group has announced details of a comprehensive response to the coronavirus pandemic outside the EU that will provide up to €6.7 billion in the coming months. This financing is part of the Team Europe response and supported by guarantees from the EU budget. It will both strengthen urgent health investment and accelerate long-standing support for private sector investment that reflects financing needs in more than 100 countries around the world.
The EIB Group will also provide €1.7 billion to support the social and economic recovery of the Western Balkans from the COVID-19 pandemic, as part of a €3.3 billion financial support package for the region announced on 29 April by the European Commission.
The immediate fast-tracked support will help to sustain jobs and livelihoods in sectors most threatened by the economic and social impacts of the coronavirus, and will be followed by additional long-term health and business financing as needed.
We are also enhancing our collaboration with the World Health Organisation (WHO) to strengthen public health, supply of essential equipment, training and hygiene investment in countries most vulnerable to the COVID-19 pandemic. This new partnership will help increase resilience to reduce the health and social impact of future health emergencies.
The Bank also joined the EU-led global Pledging Conference, contributing €4.9 billion in partnership with the European Commission to end the pandemic.
Our support in a nutshell:
- Accelerated financing and targeted technical assistance for partners in 100 countries as part of the Team Europe response package
- Short-term support for health and business investment in Africa, Eastern and Southern Neighbourhood Countries, Western Balkans, Asia and Latin America
- Increased backing for business impacted by the pandemic
For SMEs and mid-caps looking for finance
- Intermediated lending: Find out how the EIB and its partners can help your business
- Direct lending for mid-caps: Discover what the EIB can offer
We will be publishing the list of EIF intermediaries for COVID-19 related financing support on EIF’s dedicated page as soon as the relevant financing agreements have been concluded.
Meanwhile you can check here the EIF’s current network of financial intermediaries in your country.
For financial institutions willing to partner with the EIB Group
Please visit our dedicated pages for the main product categories:
The EIF guarantees will be supported by the EU budget under the European Fund for Strategic Investments (EFSI).
We will support projects that work towards halting the spread of COVID-19, finding a cure and developing a vaccine against the disease. We will also finance urgent infrastructure improvements and equipment needs in the health sector using existing framework loans or undisbursed amounts from existing health projects.
Find more information
Read more about EIB Group's work in health and life science and discover projects we have financed in the healthcare sector
As the EU bank, we support healthcare projects that aim to ensure universal access to high-quality and affordable services. Discover the impact of some of our projects
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