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The European Investment Bank (EIB) has announced it is making vital funding available to support innovative midcaps in Germany.

Innovative firms with up to 3,000 employees will be eligible for the first ‘InnovFin Midcap Guarantee’ transaction, for which the EU bank is providing a guaranteed financing framework of up to €200m. Germany’s Commerzbank is receiving the funds to hedge the risk on new loans, especially to customers undertaking research and development.

The new financial instrument is based on risk sharing and aims to create more growth and competitiveness in Europe. Companies active in the R&D field will be provided with reliable long term financing. The EIB guarantee will cover up to 50% of individual investment costs with a cap of €25m per project. Commerzbank, which acts as the intermediary financial institute in the transaction, will complement the loans per project to the tune of at least the amount of the EIB guarantee. The European Commission is supporting the financing operation under Horizon 2020.

In a statement, EIB Vice-President Wilhelm Molterer emphasised the strengths of the new InnovFin MidCap Guarantee: “This new instrument allows for more risk-taking when financing innovation and it will give intermediaries more freedom of choice in their selection of projects to be financed. These are the right measures to strengthen those companies that are particularly innovative, thereby helping to boost growth and competitiveness in Europe in the medium and long term. At the same time, the instrument will enable the participating banks to respond to the firms’ financing needs more quickly and flexibly.”

The Commerzbank facility is supported by the ‘InnovFin – EU Finance for Innovators’ MidCap Guarantee instrument, with the financial backing of the EU under Horizon 2020. InnovFin is a new range of EIB Group products designed to facilitate access to finance for innovative businesses.