EC and EIF Launch EaSI Guarantee Instrument to Support SMEs Amid COVID

The key features of the new support measures under EaSI Guarantee Instrument include higher risk coverage; broadening of certain parameters, such as an increase of the maximum exposure for micro and social enterprises; and more flexible terms. The new features will be accessible to financial intermediaries that can potentially serve thousands of companies benefiting from guarantees under the EaSI Guarantee Instrument. The objective of the new measures is to further incentivize financial intermediaries to lend money to small businesses, mitigate the sudden increase in perceived risk triggered by COVID-19 pandemic, and alleviate working capital and liquidity constraints of final beneficiaries targeted by the EaSI program. 

The EIF does not provide financing directly to micro-entrepreneurs or social enterprises. Through the EaSI Guarantee Instrument, the EIF provides financial intermediaries with a partial credit risk protection for the newly originated loans to eligible beneficiaries. Intermediaries are selected after an application under a call for expression of interest, followed by a due diligence process. Once selected by EIF, these partners act as EaSI financial intermediaries and start originating loans to eligible beneficiaries within the agreed availability period. The EaSI COVID-19 support measures are being made available to the market and rolled out based on an amended EaSI call for expression of interest published on EIF website. Financial intermediaries with existing EIF agreements under the EaSI Guarantee will be able to access the new terms of the guarantees on their request. Micro-borrower, micro, and social enterprises will be able to apply directly to their local banks and lenders participating in the scheme.

In addition, EC has approved Maltese scheme to support small and medium-size enterprises (SMEs) affected by the COVID-19 outbreak. The purpose of the scheme is to provide access to working capital to those SMEs that are facing sudden liquidity shortages due to the COVID-19 outbreak. EC has also approved a scheme for Poland to support companies affected by the outbreak. Poland notified, to EC, about a state guarantee on factoring products under the Temporary Framework. Factoring is a financial service providing liquidity to the real economy, as it involves the payment of invoices before their final due date. It is a source of working capital for companies that is alternative to bank loans. The scheme is open to enterprises of all sizes and will be implemented by the national development bank, Bank Gospodarstwa Krajowego (BGK). Under the scheme, guarantees will be available both for recourse factoring and for reverse factoring. 

Related Links

• Press Release on EaSI Guarantee Instrument
• Press Release on Polish State Aid Scheme
• Notification on Maltese State Aid Scheme

Keywords: Europe, EU, Poland, Banking, EASI Guarantee Instrument, SME, COVID-19, State Aid Rules, Temporary Framework, Credit Risk, Loan Guarantee, EIF, EC