The only EU guarantee for SME debt financing in the market will continue until the end of 2022 - Ask your bank and take advantage of the 70% guarantee

When the COVID crisis hit, several banks and debt financiers in Finland took advantage of the European Union-wide temporary EGF guarantee (European Guarantee Fund) provided by the European Investment Fund. The criteria for EGF funding are more flexible than those of the European Union guarantee schemes normally available on the market.

The EGF guarantee allows for a 70% guarantee for SMEs and smaller mid-cap companies. In addition, this can also be combined with a guarantee from Finnvera. Another exceptional feature of the EGF guarantee is that it also allows flexibility for refinancing, unlike the so-called normal EU guarantees.

If your company has loans that have not benefited from the EGF guarantee, we urge you to contact your bank as soon as possible. Now is the time to be proactive, as banks are not actively marketing these forms of guarantee that are favourable to your business.

The following types of financing are eligible for EGF funding:

• Loan (min. 3 months maturity),

• credit and overdraft facility,

• leasing, and

• factoring.

The loan guaranteed by the guarantee to be granted may be used either for investment, working capital, business purchases or refinancing.

New EU guarantee schemes available to donors estimated by end of 2022

The new EU guarantee scheme - InvestEU - was published in May 2022 for banks, finance companies and other debt financiers to apply for. The guarantee rate under InvestEU is generally 70%, similar to the EGF guarantee. The guarantees are ideal for green investments, digitalisation, innovation and creative sectors, among others.

InvestEU guarantees are expected to be available to financiers in late 2022 or early 2023. However, it is worth being active now and ask your bank about the possibility of using the new InvestEU guarantees.

If you have any questions about European Investment Fund guarantees, can't get answers from your bank or would like to discuss financing for your company or portfolio company, please feel free to contact our experts. You can find our team's contact details here.

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