EIF and leading Romanian banks join forces to empower SMEs for sustainable growth

The European Investment Fund (EIF) has signed  agreements with five banks to support Romania’s small and medium-sized enterprises (SMEs). The series of uncapped direct guarantees totalling €1 billion, is backed by the InvestEU Member State Compartment in Romania and the Recovery and Resilience Facility Romania (RRF RO), and represents an ambitious venture aimed at enhancing sustainability and competitiveness for businesses across the country.

The banks, Banca Comerciala Romana, Banca Transilvania, CEC Bank, Raiffeisen Bank and ProCredit Bank are well-known EIF partners, having successfully implemented various EIF mandates in the past, such as the SME Initiative Romania (Initiativa pentru IMM-uri).

Thanks to the Sustainability Guarantee the partner banks will be able to further support a green and sustainable transformation of the economy, and finance environmental-friendly, green and inclusive investments of the end beneficiaries. The SME Competitiveness Guarantee will allow the partner banks facilitate access to finance for a broader spectrum of companies and industries, with loan terms which would not be offered in the absence of the guarantee.

“We’ve been working hard with the Romanian government and the European Commission to make sure that Romanian businesses can get the support that they need during these difficult times,” said EIF Deputy Chief Executive Roger Havenith. “Today’s five agreements will translate those efforts into real access to finance on the ground, helping SMEs pursue their growth ambitions, driving economic progress and fostering a greener future.”

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With financing available in both RON and EUR, this endeavour will bolster cohesion regions in Romania, fostering business growth and expansion, supporting value chains, sustainable infrastructure products and services, renewable energy and energy efficiency, and clean transport, while propping up the Romanian financial ecosystem.

The value of the financing is EUR 1 billion in this round, enough for about 14,000 SMEs, according to Roger Havenith. The value of the financing will continue with new rounds, to reach a total of EUR 2.5 billion. Usually, the SMEs that are using this financial instruments offered are medium companies, with 10 to 60 employees, and the valua of the loans are between EURO 60,000 and 100,000.

Reduced interest rates

The EIF guarantee allows its partner banks to offer improved financing terms such as reduced interest rates, reduced collateral requirements and reduced down-payment requirements for investment loans. Moreover, thanks to the EIF guarantee, banks can offer longer maturities, increased financing volumes and support excluded segments such as start-ups, which would not have been targeted in the absence of the guarantee.

The uncapped direct guarantees are part of the InvestEU Portfolio Guarantee Products under the InvestEU Member State Compartment in Romania. Funded through Romania’s Recovery and Resilience Fund, this initiative comprises two vital components: the RRF RO SME Competitiveness Product and the RRF RO Sustainability Product. These programs are pivotal in advancing Romanian businesses’ competitiveness and steering the nation toward sustainable economic growth.

 The European Investment Fund (EIF) is part of the EIB Group. It supports Europe’s small businesses by improving their access to finance through a wide range of selected financial intermediaries, such as banks, guarantee and leasing companies, micro-credit providers and private equity funds. The EIF designs and offers equity and debt financing instruments fostering EU objectives in support of entrepreneurship, growth, innovation, research and development, the green and digital transitions and employment.

In Romania, the EIB Group delivers between €1 and 1.5 billion every year. Since its inception, the EIF has provided financing worth €3.1 billion through 119 contracts in Romania, while the EIB has provided finance and expertise for 179 investment projects in Romania since 1991, worth € 17.73 billion.

The InvestEU Member State Compartment allows the Member States to contribute a part of their shared management funds, resources from the Recovery and Resilience Facility, and national resources to the InvestEU Fund by setting up a dedicated Member State Compartment. With this voluntary contribution Member States can leverage on the InvestEU guarantee to support specific national priorities. Under the Member State Compartment, loans, guarantees or equity investments can be offered as a complement to other public and private investments.