The European Investment Fund has helped finance more than a million SMEs over the past 26 years. The EIB and EU-funded institution is now stepping up to help Europe rebuild as it emerges from lockdown, providing €2.2bn to financial intermediaries, thereby unlocking €8bn of finance.
Here, Chief Investment Officer Alessandro Tappi, who has served at the EIF for the past 25 years, explains why a coordinated response is required to nurse European SMEs back to health.
Alessandro Tappi : European SMEs have certainly been the most severely affected, not only because they are less economically resilient that bigger businesses, but also because they tend to be over represented in sectors that have been particularly badly hit, such as tourism, leisure and retail.
Of course, a lot of support has been offered, with significant measures taken by individual countries. But these have not always been well coordinated and have only served to reinforce the fact that Europe remains fragmented. It wasn’t until mid-April, that the European Commission started looking at emergency measures to support SMEs. However, it must be said, those programmes have since accelerated enormously with a series of important initiatives.
AT : To begin with, the EIB put together a €40bn package, comprising loans to corporates and guarantees to loans for SMEs. Essentially, the EIB has refocused all of its activities towards COVID-affected countries and sectors. The European Commission has also launched an €8bn programme to support companies with guarantees, targeting the smaller end of the spectrum.
But the most significant initiative we are seeing, involves contributions being made by member states. Potentially, we could see all 27 involved, although it is more likely to be 25 or 26. Nonetheless, we are talking about a programme that has been broadly accepted and supported. Member states will contribute to a Pan-European Guarantee Fund which will cover a whole host of financial instruments.