The European Investment Bank (EIB) will deliver the funds through the Investment Plan for Europe (Juncker Plan) to Funding Circle, a global SME loan platform. The money will be used to support over 2,000 SMEs in the Dutch and German markets in the coming two years.
The European Commission (EC) reports that an additional EUR 25 million from a top global asset manager will also go towards assisting the Dutch and German SMEs. Hence, the investments serve to give the European SME sector, where some 18% of SMEs did not land a full bank loan they had hoped for in 2018, a much-need boost.
EIB vice president Ambroise Fayolle, who oversees the bank’s German operations and its dealings with the European Fund for Strategic Investments, the centre of the Investment Plan for Europe, underscores the importance of SMEs in the European economy while stating the EIB’s role in facilitating SME growth via Funding Circle:
“SMEs are important drivers of growth, employment and innovation in Europe; they represent over 90% of businesses and employ two-thirds of the active working population. The EU bank seeks to ensure better access to finance for SMEs at all stages of development through a range of tailored instruments. It also focuses on partnerships that facilitate access to finance for SMEs in a bid to boost innovation, competitiveness and employment opportunities. Therefore I welcome very much our very close and constructive cooperation with Funding Circle.”
Funding Circle’s chief capital officer, Sachin Patel, speaks of the partnership as such:
“Facilitating direct lending to small businesses through the Funding Circle platform is a highly efficient way for supranational banks to give small businesses access to much-needed finance. This ground-breaking investment in German and Dutch small business loans by the EIB builds on the success of our existing partnership in the UK We are proud to continue expanding our support for German and Dutch businesses.”
The current transaction between the EIB and Funding Circle is a part of an ongoing partnership, going back to 2016. Since 2016, the EIB has lent EUR 120 million to UK small businesses. The present EIB loan is backed by the European Fund for Strategic Investments, which forms the centre of the Investment Plan for Europe. Here, the EC and EIB came together as strategic partners where the latter’s funding activities seek to increase the competitiveness of Europe’s economy.