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EFSI for SMEs: How does it work?

The European Fund for Strategic Investment, belonging to the Investment Plan for Europe, can be an interesting source of financing for SMEs.

The European Fund for Strategic Investment (EFSI) aims at overcoming the investment gap in the EU by mobilising private financing for strategic investment. This initiative has been launched by the EIB Group, that is to say the European Investment Bank (EIB) and the European Investment Fund (EIF), and the European Commission. EFSI is also funded by these two entities. EFSI is divided into two strands:
– the SME Window implemented through EIF
– the Infrastructure and Innovation Window deployed through the EIB

For SMEs looking for investment opportunities, it is interesting to understand how the SME Window of EFSI works.

The European Investment Fund, based in Luxembourg, is responsible for the implementation of the SME Window. In this purpose, EIF works with financial intermediaries that are located in Member States. EIF provides these financial intermediaries with new portfolios of SME loans. They have then to propose loans at favourable conditions for SMEs.

Two programmes for SMEs have been reinforced through EFSI:
COSME Loan guarantee facility: focused on supporting higher risk SMEs and higher risk SME transactions. The eligible companies for COSME loan are SMEs, established and operating in one or more EU Member States and COSME Associated Countries.
InnovFin SME guarantee facility: focused on the financing of innovative and R&D driven SMEs and small mid-caps. The eligible companies for InnovFin SME guarantee are research-based and innovative SMEs and Small Mid-caps established and operating in one or several EU Member States and Horizon 2020 Associated Countries.

What to do to benefit from this financing?

When an SME wants to be financed through EFSI, it needs:
– First to go to the finance portal set up by the Commission (link to the portal) and find out the financial intermediaries of its country
– Then it has to apply directly to the respective financial intermediary. The terms and conditions will be set by the financial intermediary
– The financing provided by the financial intermediary will be at much better conditions than it would be normally (e.g. lower interest, longer durations, less collateral requirements, etc.) thanks to the EU funding.
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