MICROCAPITAL BRIEF: European Commission, European Investment Fund (EIF) to Guarantee $107m Through European Programme for Employment and Social Innovation (EaSI), Expect to Generate $213m in Loans to European Social and Micro-enterprises

The European Commission, the European Union’s executive body, and the European Investment Fund (EIF), an EU-affiliated provider of finance to organizations that lend to small and medium-sized enterprises (SMEs), recently partnered to introduce the European Programme for Employment and Social Innovation (EaSI). The program has a total budget of EUR 193 million (USD 213 million), which is to be used to support “microfinance and social entrepreneurship.” Of this, EaSI will provide guarantees totaling EUR 96 million (USD 107 million) between 2014 and 2020 – with up to 80 percent guarantee coverage for each retail loan, subject to overall portfolio loss rate cap of 30 percent per lending intermediary. The remainder of the funds are to be allocated toward loans and equity instruments. In total, the program is expected to generate EUR 500 million (USD 558 million) in loans to individuals seeking to establish or develop micro- and social enterprises.

EaSI will not provide loans directly to individuals, but will operate through local intermediaries, such as microfinance institutions and banks. According to Marjut Santoni, the EIF Deputy Chief Executive, the “programme builds on the successful EU Progress Microfinance Initiative, EaSI’s predecessor.” As of June 2015, the program will be available in most European Union countries, Turkey and Iceland.

According to Marianne Thyssen, the European Commission’s Commissioner for Employment, Social Affairs, Skills and Labour Mobility, “By easing access to finance, new enterprises will be set up and existing ones will be scaled up. The programme…is a clear expression of the Commission’s firm commitment to create jobs and growth and improve social conditions.”

EIF is a public-private member of the EIB Group, the parent organization of the European Investment Bank (EIB). As of 2014, EIF had total assets of EUR 2.04 billion (USD 2.28 billion).

By Benjamin Krupp, Research Associate

About European Investment Bank (EIB)

The European Investment Bank (EIB) was created in 1958 and serves as the long-term lending bank of the European Union as of 2014. In addition to supporting projects in EU member states, its main priorities include financing investments in likely future member states and EU partner countries, principally in the area of small and medium-sized enterprises. According to its website, “the EIB operates on a non-profit maximizing basis and lends at close to the cost of borrowing.” The total lending portfolio of EIB was EUR 71.7 billion (USD 95.8 billion) as of 2013.

Sources and Additional Resources

[1] EIF, June 24, 2015: European Commission and European Investment Fund mobilise EUR 500 million for social and micro-entrepreneurs

MicroCapital, July 24, 2014: European Investment Fund (EIF) to Guarantee Loans Disbursed by UniCredit Bulbank to Microenterprises in Bulgaria Under Progress Microfinance Facility

MicroCapital, June 18, 2014: European Investment Fund (EIF) to Guarantee $9m in Microloans Disbursed by Romania’s Libra Internet Bank Under Progress Microfinance Facility

MicroCapital Universe Profile: European Investment Bank (EIB)

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