Investment Plan for Europe: EIF and Garantiqa deal to provide HUF 80 billion for Hungarian SMEs

The European Investment Fund (EIF) and Garantiqa Creditguarantee (Garantiqa) have signed a COSME agreement in Hungary that will allow Garantiqa to provide guarantees to HUF 80 billion (ca. EUR 260 million) of loans to small and medium-sized Hungarian businesses. This agreement was made possible by the support of the European Fund for Strategic Investments (EFSI). EFSI is the central pillar of the European Commission's Investment Plan for Europe.

The agreement signed today is the largest SME financing initiative in Hungary at the moment, as it provides some 3,500 Hungarian SMEs with access to loans totalling HUF 80 billion via a guarantee facility. Borrowers will be able to enjoy the benefits of the COSME counter-guarantee when using overdraft facilities and working-capital loans, investment loans, leasing facilities and bank guarantees.

EIF Chief Executive, Pier Luigi Gilibert said: "Business support and the creation of jobs and growth, lies at the heart of EIF’s strategy. EIF is committed to supporting SMEs and is pleased to be signing the largest EFSI SME agreement in Hungary, with Garantiqa. These 3,500 small and medium-sized enterprises will contribute to driving job creation and growth in Hungary and across Europe.”

Tibor Navracsics, European Commissioner for Education, Culture, Youth and Sport, said: “The agreement signed today by the European Investment Fund and Garantiqa is very good news for small Hungarian businesses. Thanks to support from the Investment Plan for Europe, not only will 3,500 small businesses have access to HUF 80 billion in finance to grow their companies, but the deal will also help reduce the administrative burden involved in getting a loan. I encourage SMEs in Hungary with an investment proposal to use this opportunity and apply to Garantiqa.”

Dr Éva Búza, CEO of Garantiqa Creditguarantee Co. Ltd emphasised: “Guarantee facilities have been growing in popularity among micro, small and medium-sized enterprises in recent years. This is reflected in the fact that Garantiqa achieved record business results last year, with the guarantee portfolio growing by 21 percent to HUF 443 billion, and businesses taking out HUF 540 billion in credit using its guarantee facilities. Garantiqa expects the guarantee portfolio to grow by more than 20 percent this year, due, among other factors, to the cooperation agreement that has just been signed.”

Tamás Bernáth, Chairman & CEO of the Hungarian Development Bank (MFB), commented: “The “MFB-Indicator” corporate survey shows a growing willingness on the part of small and medium-sized enterprises to borrow and invest, and this is also supported by official central bank figures: in the second quarter of this year, the corporate lending market expanded by 7 percent. Lending to the narrowly defined SME sector grew by 8.3 percent, while lending to the broadly defined sector that includes independent enterprises increased by 13 percent.”

Today's agreement means that businesses which were previously excluded from state counter-guarantees will now also be able to benefit from favourable guarantee-based facilities. In addition, The EU-backed “portfolio guarantees”, further reduce the administrative burden on both the lending banks and the businesses, and reduces the time needed to place loans.

About EIF

The European Investment Fund (EIF) is part of the European Investment Bank group. Its 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. More information on EIF's work under the EFSI is available here.

About Garantiqa Creditguarantee

Garantiqa Creditguarantee Co. Ltd. was founded in 1992 by the State of Hungary, the major domestic commercial banks, savings cooperatives and a few business advocacy groups, for the purpose of participating as an economic multiplier in relation to lending to domestic small and medium-sized enterprises. On 13 December 2007, the Hungarian Financial Supervisory Authority (HFSA) licensed Garantiqa Creditguarantee Co. Ltd. for operation with a status equivalent to that of a credit institution, as the first financial enterprise operating in Hungary to receive such a licence. During its 25-year history, the company has provided guarantee services in connection with some HUF 5,000 billion in loans.

About COSME

COSME is the EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (SMEs) running from 2014 to 2020 with a total budget of EUR 2.3 billion. At least 60% of the programme will be devoted to easing access to finance for SMEs in Europe, with two financial instruments. The COSME Loan Guarantee Facility supports guarantees and counter-guarantees to financial institutions to help them provide more loans and lease finance to SMEs. This facility also includes securitisation of SME debt finance portfolios. The COSME programme also invests through the COSME Equity Facility for Growth in equity funds that provide risk capital to SMEs mainly in the expansion and growth stages. The COSME programme builds on the success of the Competitiveness and Innovation Framework Programme (CIP) (2007-2013) which helped to mobilise more than EUR 21 billion of loans and EUR 3 billion of venture capital to almost 400,000 SMEs in Europe.

Businesses can contact selected financial institutions in their country to access EU financing: http://www.access2finance.eu/

About the Juncker Plan

The Investment Plan for Europe, the so-called "Juncker Plan", is one of the European Commission's top priorities. It focuses on boosting investments to create jobs and growth by making smarter use of new and existing financial resources, removing obstacles to investment and providing visibility and technical assistance to investment projects.

The European Fund for Strategic Investments (EFSI) is the central pillar of the Juncker Plan. It provides a first loss guarantee, allowing the EIB group to invest in more, often riskier, projects. The EFSI is already showing concrete results. The projects and agreements approved for financing under the EFSI so far are expected to mobilise more than EUR 225 billion in investments and support around 445,000 SMEs across all 28 Member States.

On 13 September, the European Parliament and Member States came to an agreement in principle on the extension and strengthening of the EFSI. This agreement extends the EFSI's duration as well as increases its financial capacity.

Press contacts:

EIF:
David Yormesor
Tel.: +352 42 66 88 346
E-mail: d.yormesor@eif.org

Garantiqa Creditguarantee:
József Orosz
Tel.: +36 30 754 6614
E-mail: orosz.jozsef@garantiqa.hu

European Commission:
Siobhan Millbright
Tel.: + 32 22964976
E-mail: siobhan.millbright@ec.europa.eu