Finnvera, a financier owned by the government of Finland, recently joined the Pan-European Guarantee Fund (EGF), an investment vehicle with EUR 25 billion (USD 29 billion) intended to catalyze an additional EUR 200 billion (USD 241 billion) in liquidity for firms adjusting to the COVID-19 pandemic. Under the program, Finnvera plans to lend EUR 650 million (USD 780 million) by December to firms in Finland that have more than 250 employees, turnover of at least EUR 50 million (USD 60 million) per year or a balance sheet of at least EUR 43 million (USD 52 million). EGF, which was founded by the EU’s European Investment Bank (EIB), will cover 75 percent of any losses Finnerva may experience from the loans. Each loan may be as large as USD 120 million (EUR 100 million), with a term of up to six years.
Finland’s Economic Affairs Minister Mika Lintila called the agreement “excellent news for Finnish companies, ensuring adequacy of companies’ working capital during the COVID-19 pandemic.”
EGF was founded in April 2020 to alleviate capital stress inflicted by the COVID-19 pandemic on companies in EU member states. In addition to guarantees, EIB will use the fund to issue equity, debt and other financial assistance.
EIB, founded in 1958, is “focused on innovation, SMEs [small and medium-sized enterprises], infrastructure and climate,” primarily in EU member states and potential future member states. In addition to funding, the institution “adds value in project implementation and the modernisation of public policies thanks to its technical and financial expertise and advisory services.” During 2019, the institution disbursed EUR 48 billion (USD 57 billion), about 90 percent of which it deployed within the EU.
By Tejas Gumudavelly, Research Associate
Sources and Additional Resources
EIB press release
https://www.eib.org/en/press/all/2021-115-european-guarantee-will-enable-finnvera-to-grant-eur-650-million-of-loans-to-finnish-companies#
Finnvera homepage
https://www.finnvera.fi
Pan-European Guarantee Fund description
https://www.eif.org/what_we_do/egf/index.htm
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