European Investment Fund backs SME Finance to the tune of €40 million
The European Investment Fund (EIF) and Lithuania’s SME Finance have signed a guarantee agreement under the InvestEU programme to facilitate more than €40 million in new financing in the form of loans, leases and factoring for micro and small enterprises and small mid-caps in the Baltics, Finland and the Netherlands.
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Backed by portfolio guarantees of up to 80% from the EIF, SME Finance will extend lending to targeted businesses to achieve new growth by investing in innovation, sustainability or digitalisation projects. SME Finance will also provide microfinancing of up to €50 000 specifically designed for very small businesses employing up to ten employees with yearly revenues that do not exceed €2 million.
“This agreement with the EIF means SME Finance will be able to offer financing to businesses on significantly better terms,” said SME Finance CEO Mindaugas Mikalajūnas. "Our flexible and digital financing solutions already cover investment projects and working capital. We now offer even better pricing, reduced collateral requirements, or even no collateral at all.”
The EIF aims to address the persistent challenges small and medium-sized enterprises face in accessing finance. For instance, a recent EU study shows that Lithuanian banks reject 32% of loan applications from small businesses, while the EU average is 7%.
“We are fully aligned with SME Finance’s motto of empowering growth for small businesses seeking to invest in innovation, digitalisation, and sustainability,” said EIF Chief Executive Marjut Falkstedt. “These are key InvestEU priorities and in achieving them, we are pleased to support the agile online and alternative lenders helping to diversify sources of financing for SMEs in Lithuania and the Baltic region.”