EUR 15 million of EU financing for micro-entrepreneurs in Latvia under the Juncker Plan
07 August 2018
The European Investment Fund (EIF) and ALTUM, a state-owned development institution of Latvia, have signed a microfinance guarantee agreement under the EU Programme for Employment and Social Innovation (EaSI). This new financing agreement was made possible by the European Fund for Strategic Investments (EFSI), the core of the Investment Plan for Europe. Micro-entrepreneurs will be able to benefit from loans at a reduced interest rate with lower collateral requirements under the EU supported programme.
This new EaSI guarantee agreement allows ALTUM to provide loans to 600 micro-entrepreneurs over the next 3 years across Latvia. Micro-entrepreneurs will be able to benefit from loans at a reduced interest rate with lower collateral requirements under the EU supported programme. ALTUM will primarily target start-ups and small businesses.
Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen, said: "With the help of EU funding, ALTUM will improve access to finance for about 600 micro-enterprises in Latvia, many of whom face difficulties in accessing credit from traditional banking sources. This new EaSI guarantee agreement will allow micro-entrepreneurs to benefit from loans with favourable conditions. This shows again that the European Commission, through the EaSI programme, is fully committed to boosting employment in Europe and getting more people into jobs."
Pier Luigi Gilibert, EIF Chief Executive: “I am pleased that the joint agreement will help Altum to launch a new micro lending product addressing the financing needs of micro-enterprises in both start-up and development phases. Supporting borrowers who are at risk of social exclusion and face difficulties in accessing the credit market helps to drive forward an inclusive entrepreneurship culture. ”
Reinis Bērziņš, CEO of ALTUM: “The cooperation agreement with EIF is a testimony that local market investments by the European Union through various financial instruments is not an abstraction. This cooperation grants as an opportunity to provide independent support to microenterprises who could then apply for necessary equity investments. Main beneficiaries of this programme are recently established companies and those with miniscule turnover – they can access funding up to EUR 25,000 with just a personal guarantee and no collateral. We are excited about this EaSI agreement because it will grant companies access to funding under favourable conditions, thus promoting sustainable economic growth of microenterprises.”
The EaSI Guarantee scheme was launched in June 2015 and is funded by the European Commission and managed by the European Investment Fund. EIF will not provide direct financial support to enterprises but will implement the facility through local financial intermediaries, such as microfinance, social finance and guarantee institutions, as well as banks active across the EU-28 and additional countries that are participating in the EaSI programme. These intermediaries will deal with interested parties directly to provide support under the EaSI Guarantee.
About the Programme for Employment and Social Innovation
The European Commission's Programme EaSI aims at supporting the EU's objective of high level employment, adequate social protection, fighting against social exclusion and poverty and improving working conditions. The microfinance and social entrepreneurship axis of the EaSI programme provides support to financial intermediaries that offer microloans to entrepreneurs or finance to social enterprises. The objective is to increase access to microfinance, which includes microcredit i.e. loans of up to EUR 25,000, in particular for vulnerable persons and micro-enterprises. In addition, for the first time, the European Commission is supporting social enterprises through investments of up to EUR 500,000. The microfinance and social entrepreneurship support is currently being implemented through the EaSI Guarantee, which enables financial intermediaries to reach out to (potential) entrepreneurs that would not have been able to gain finance otherwise due to risk considerations.
Furthermore, the Commission is reinforcing the social dimension of the EFSI for both microfinance and social entrepreneurship. Overall, the total amount of support to these areas is expected to increase (from EUR 193 million under the EaSI programme) to about EUR 1 billion, mobilising some EUR 3 billion in additional investment.
The Juncker Plan for EU economic growth
The Investment Plan for Europe, the Juncker Plan, is one of the EU´s top priorities to boost investments and to create jobs and growth by removing obstacles to investment, providing visibility and technical assistance to investment projects, and making smarter use of existing and new financial resources. With guarantees from the European Fund for Strategic Investments the EIB and EIF are able to take on a higher share of project risk, encouraging private investors to participate in the projects. The European Parliament and Member States agreed in December 2017 to extend EFSI's duration and increase its financial capacity. As of July 2018, the Juncker Plan is set to trigger EUR 335 billion in investment across the EU and improve access to finance for 700,000 SMEs.
About the European Investment Fund
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.