First InnovFin guarantee agreement in Ireland as Bank of Ireland and EIF sign deal to finance innovative companies
Pictured are Jonathan Taylor, Vice-President of the EIB and Mark Cunningham, Director, Bank of Ireland Business Banking
The European Investment Fund (EIF) and Bank of Ireland have signed an agreement to increase lending to innovative small and medium-sized enterprises (SMEs) as well as small Mid-caps under InnovFin – EU finance for innovators, an initiative supported by the European Commission.
The new agreement allows Bank of Ireland to provide finance to innovative companies in Ireland for a total of EUR 100m over the next 2 years with the support of a guarantee provided by the EIF and backed under Horizon 2020, the EU Framework Programme for Research and Innovation. This is the first InnovFin SME guarantee signature in Ireland, enabling Bank of Ireland to offer innovative companies additional financing at favourable conditions.
The aim of the InnovFin SME Guarantee is to encourage banks or other financial institutions to lend to SMEs and small mid-caps (firms with fewer than 500 employees) in need of investment and/or operating capital to finance research, development and innovation activities, with EU financial support. Financial institutions are being selected by the EIF following a call for expression of interest for financial intermediaries across Europe.
Commenting on the announcement, Mark Cunningham, Director, Bank of Ireland Business Banking said “Bank of Ireland is pleased to be the first Bank in the country to partner with the EIF and the Commission to offer the InnovFin SME Guarantee. The Bank is the largest lender to the Irish economy, providing more than half of all new lending to SMEs and the Agri Sector. We have also recently sponsored one of the largest start-up events in the world. The InnovFin SME Guarantee is the latest addition to our range of extensive supports for start-up’s, entrepreneurs, fledgling companies and SMEs.”
About InnovFin SME Guarantee
InnovFin SME Guarantee provides guarantees and counter-guarantees on debt financing of between €300,000 and €7.5 million, in order to improve access to debt finance for innovative small and medium-sized enterprises and small midcaps (up to 499 employees). The InnovFin SME Guarantee is implemented by the European Investment Fund, and will be rolled out through financial intermediaries (banks and other financial institutions) in EU Member States and Associated Countries. Under the InnovFin SME Guarantee, financial intermediaries will be guaranteed by the EIF against a proportion of their losses incurred on the debt financing. InnovFin SME Guarantee is part of InnovFin – EU Finance for Innovators, a new range of EIB Group (including EIF and EIB) products to facilitate access to finance for innovative businesses. This transaction is supported with the financial backing of the European Union under Horizon 2020 Financial Instruments.
About the EIF
The European Investment Fund’s (EIF) central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total net commitments to private equity funds amounted to over EUR 8.8bn at end 2014. With investments in over 500 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF’s guarantees loan portfolio totalled over EUR 5.6bn in over 350 operations at end 2014, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.
About Horizon 2020
On 1 January 2014, the European Union launched a new research and innovation funding programme called Horizon 2020. Over the next seven years almost €80 billion will be invested in research and innovation projects to support Europe’s economic competitiveness and extend the frontiers of human knowledge. The EU research budget is focused mainly on improving everyday life in areas like health, the environment, transport, food and energy. Research partnerships with the pharmaceutical, aerospace, car and electronics industries also encourage private-sector investment in support of future growth and high-skilled job creation. “InnovFin – EU Finance for Innovators”, the new generation of EU financial instruments and advisory services was developed under Horizon 2020 to help innovative firms access finance more easily. “InnovFin – EU Finance for Innovators” will help to inject up to EUR 48 billion in investments in Research and Innovation across Europe.