Estonia to benefit from SME loan scheme

Small and medium-sized enterprises in Estonia will get easier access to risk capital for financing innovation activities thanks to the new EU-backed loan guarantee facility under Horizon 2020.

A deal signed today between Estonian Bank LHV Pank and the European Investment Fund (EIF) will allow the bank to enter into new loan agreements with innovative SMEs and small mid-caps for a total of €40m over the next two years. The loans will be guaranteed up to 50% by the European Investment Fund and the EU under InnovFin SME Guarantee, part of Horizon 2020.

Commenting, the European Commissioner for Research, Science and Innovation, Carlos Moedas, said: “Estonia has been a digital economy leader and a hub for innovative companies, especially in the ICT-sector. By helping to ensure such credit for innovative companies, the EU opens doors for Estonia’s boldest and most creative minds, giving a boost to the Estonian and European economy.”

The ‘InnovFin SME Guarantee’ provides guarantees and counter-guarantees on debt financing of between €25,000 and €7.5m in order to improve access to loan finance for innovative SMEs and small midcaps (up to 499 employees). The facility is managed by the EIF and is rolled out by banks and other financial institutions in EU member states and associated countries. Under this facility, financial intermediaries are guaranteed by the EIF against a proportion of their losses incurred on the debt financing covered under the facility.