- The €24.4 billion European Guarantee Fund, part of an initial EU COVID-19 recovery package to be deployed within 2021, is about to hit halfway mark
- €11.7 billion in financing to support businesses around the EU in COVID-19 pandemic
- Approved funding is expected to mobilise nearly €94 billion
The European Guarantee Fund (EGF), part of the €540 billion EU recovery package agreed in 2020, has approved funding amounting to almost half its target for 2021. After clearance under the EU state aid notification process in December 2020, the initiative has now approved €11.7 billion in support of European businesses struggling with the economic fallout of the COVID-19 pandemic. This is almost half the fund’s target for 2021. The fund mobilises additional financing, and initiatives financed so far are expected to generate €93.9 billion in funding for the EU economy. With €2.1 billion in financing also signed at the end of April, EGF funding is already reaching businesses across the European Union.
“The EIB Group was among the first off the mark in ensuring Europe helped businesses and citizens deal with the economic fallout of the COVID-19 crisis. Our main effort with EGF is to support EU companies and providing the financing they need to survive the pandemic”, said EIB President Werner Hoyer. “These figures show that Europe’s response is making a real difference in record time. They add to the EIB Group’s track record in financing the research and development of treatments and vaccines, which today bring us light at the end of the COVID tunnel”, President Hoyer added.
With agreements signed in nearly all of the 22 participating EU countries, including sizeable deals with Nordea, Raiffeisen and Banca March, the EGF is currently on track to mobilise up to 8 times its volume of EUR 24.4 billion by the end of 2021. Demand for EGF financing is strong, and further approvals and signatures are expected to rapidly bring the EGF well beyond 50% of its target by early summer.
“SMEs need financing and they need it now.” Added EIB Vice-President and Chairman of the EGF Board Dario Scannapieco. “We are working flat out to deliver record amounts of resources to the markets. In the first six months we have mobilised nearly €94 billion, almost 50% of the initiative’s target, this will ensure that EU entrepreneurs have the support they need.”
The EGF was founded by the European Investment Bank Group and EU Member States as a protection shield for European companies hard hit by the COVID-19 crisis. EGF guarantees act as an incentive for financial intermediaries to lend more money to companies under better conditions, helping businesses access rapid and advantageous financing and overcome the economic fallout of the COVID-19 pandemic.