Half a billion euros of loans for micro- and social enterprises over the next seven years. This could be the consequence of an important agreement signed on the 24th of June between the European Commission and the European Investment Fund (EIF)
The agreement provides financial intermediaries supporting micro- and social enterprises with a 96 million euros guarantee that could mobilise 500 million euros of loans during the period 2014-2020. This is the latest breakthrough development of the third axe of the European Programme for Employment and Social Innovation (also called “EaSI”), which, among other, aims at increasing the availability and accessibility of microfinance for vulnerable groups and micro-enterprises and a better access to finance for social enterprises.
The EaSI Guarantee Financial Instrument will be managed and implemented by the EIF on behalf of the European Commission. With a total of 96 million euros, this instrument will provide capped guarantees and counter-guarantees covering loan portfolios in the microfinance and social entrepreneurship segments (with respectively 56 million euros for the first segment and 40 million euros for the second). To whom? Not directly to the micro- and social enterprises themselves, but to those financial intermediaries supporting them.
Financing for social enterprises
Looking closer at the social entrepreneurship segment (40 million euros of guarantee available), eligible financial intermediaries can be public and private bodies established on a national, regional or local level in one or several EaSI Participating Countries (the 28 EU Member States, Iceland and Turkey, etc.), authorised to provide financing for social enterprises. In practice, these intermediaries can be financial institutions (banks, cooperative banks, etc.), guarantee schemes and/or institutions, foundations, family offices, NGOs, debt fund and social impact funds or other institutions duly authorised to provide loans/guarantees or risk-sharing structures.
The guarantee rate will be covering up to 80% of the loan granted to a social enterprise (incl. mezzanine loans, sub-ordinated loans, leases, profit-sharing loans, etc.), as long as the loan doesn’t exceed 500.000 euros. While the key characteristics of social enterprises remain unchanged (social aim as primary objective, continuous economic activity, limits on distribution of profits, social impact measurement, etc.), their turnover or balance sheet shouldn’t exceed 30 million euros and they cannot be listed on any stock market in order for the intermediary to benefit from the European guarantee.
Should you have any question about EaSI Social Entrepreneurship Guarantee, please contact Elinor de Pret at EVPA. You can also watch here the webinar EVPA held on the 17th of June 2015 on EU Funding, during which experts from the European Commission and the European Investment Fund explained the specifics of the new guarantee instrument.
Ask more info about this article