Deep and Comprehensive Free Trade Area Initiative East Guarantee Facility (DCFTA)

The Deep and Comprehensive Free Trade Area (DCFTA) Initiative East mandate aims to strengthen the economic development in the countries which have signed an association agreement with the EU - namely Georgia, the Republic of Moldova and Ukraine (DCFTA East countries) - by providing financial and technical support to micro, small and medium-sized enterprises (SMEs).

The DCFTA Initiative East Delegation Agreement was signed by the European Commission and the EIB in December 2016, according to which EIF is entrusted by EIB to manage and implement the guarantee facility pillar (DCFTA Initiative East GF).

DCFTA Initiative East GF seeks to enhance access to finance for SMEs, supporting economic growth and employment-generating activities. The objective is to help the SME sector in these countries align to EU standards. A total loan volume of around EUR 300m is expected to be generated for the benefit of SMEs in underserved economic segments.

The EU funding for the DCFTA Initiative East GF is provided by the Neighbouring Investment Facility (NIF) and the programme of EU Support to Ukraine to Re-launch the Economy (EU SURE). These form part of the European Commission’s wider EU4Business initiatives. The total amount of EU funding is EUR 50m.

How does the DCFTA Initiative East GF work and what are its benefits?

Selected financial intermediaries will be provided with a capped first loss portfolio guarantee or counter-guarantee, including credit risk coverage for the creation of new loan portfolios. This will enable local intermediary banks to improve lending terms and conditions. DCFTA Initiative East GF is expected to improve access to affordable finance for SMEs in the participating countries.   

Who is eligible to become a financial intermediary under the DCFTA Initiative East GF?

Eligible applicants are:

• Financial or credit institutions or guarantee institutions duly authorised to carry out lending, leasing or guarantee activities in accordance with applicable laws and regulations, established and operating in one or several of the DCFTA East countries.

For detailed and complete eligibility criteria please refer to the application documents below.

Which companies can benefit from the DCFTA Initiative East GF?

EU-guaranteed loans under the DCFTA Initiative East GF will be available to all SMEs established and located in the DCFTA East countries. A list of financial intermediaries in each country will be published on EIF’s website following the completion of a standard selection procedure.