Europe’s Microcredit Providers Have It EaSI
BRUSSELS, Belgium, February 28, 2017 (Maximpact.com News) – The European Investment Fund and Nest Bank earlier this month signed a microfinance agreement aimed at supporting micro-businesses in Poland under the new EU Programme for Employment and Social Innovation (EaSI).
EaSI is a new source of funding, offered by the European Investment Fund and the European Commission, to help micro-credit and social enterprise finance providers develop their businesses.
The EaSI guarantee plan provides support to financial intermediaries that offer microloans to entrepreneurs or finance to social enterprises that would not have been able to obtain financing otherwise due to risk considerations.
The goal is to increase access to microfinance for vulnerable groups who want to set up or develop their business and micro-enterprises, through loans of up to €25,000.
EaSI aims to contribute to the implementation of the Europe 2020 strategy by supporting the EU’s objective of high level employment, guaranteeing adequate social protection, fighting against social exclusion and poverty and improving working conditions.
The new EaSI Capacity Building Investments Window will reinforce the capacity of selected financial intermediaries in the areas of microfinance and social enterprise finance.
Through equity investments such as seed financing and risk capital, EaSI will support the development of these finance providers in their efforts to do things such as open a new branch, invest in human resources, develop a new IT tool or finance expenses.
In Poland, with the financial backing of the European Commission, the European Investment Fund is providing a guarantee that will enable Nest Bank to provide over €9 million worth of loans on favorable conditions to about 1,300 microbusinesses in Poland over the next three years.
Earlier this month, France became the first EU Member State to benefit under EaSI from the support of the European Fund for Strategic Investments, the heart of the Investment Plan for Europe.
This guarantee will allow Initiative France to award more than €10 million in interest-free loans to more than 500 French microenterprises over the next three years.
The European Investment Fund is using its EaSI guarantee to support Initiative France in the context of its Initiative Remarquable unsecured loans intended for businesses taking an economically responsible approach and creating jobs.
Announcing the new capacity building project, EU Commissioner for Employment, Social Affairs, Skills and Labour Mobility Marianne Thyssen said in December, “Ultimately, these investments will help increase the offer and opportunities for micro-borrowers and social enterprises.”
“It responds to the needs of financial institutions that want to build up their capacity and reinforce the offer on the market,” Thyssen said. “Through this instrument, we confirm our commitment to give a boost to jobs and growth and help the most vulnerable people in the labour market.”
At the signature event in Paris in December, EIB Vice-President Ambroise Fayolle said “The Juncker Plan continues to develop in France, with 46 operations signed in France so far, accounting for a total amount of €3.1 billion, which is expected to generate an additional €15.9 billion.“
“This new agreement with Initiative France marks an important milestone in the EIB Group’s support for small French firms,” said Fayolle. “By extending the scheme to businesses in the weakest regions, to job creators in priority districts and young student entrepreneurs, we will further develop our financing and support aims.”
The 222 platforms of the Initiative France associative network of creative financing and corporate buyers provide unsecured loans to 19,000 entrepreneurs each year.
At least 60 percent are unemployed. They are expected to create and develop over 16,000 businesses, creating more than 40,000 jobs.
The progress of 55,000 entrepreneurs is being followed, and 9,000 of them are being mentored.
Louis Schweitzer, president of Initiative France, explained, “This new support from the European Investment Fund confirms the effectiveness of the unique Initiative France model in general and of the Initiative Remarquable program in particular. We are also very proud to be the first beneficiaries in Europe of EU support under its EaSI program.”
In 2015, €176 million of unsecured loans led to over €1 billion in bank loans. These local associations, well-integrated into their local areas, have 950 staff and 16,180 volunteers, including 4,640 business mentors to support new entrepreneurs.
The combination of the mentoring, the loans, and the banking services has helped these enterprises to achieve a 88 percent survival rate over three years, compared with a national rate of 70 percent, according to the French National Institute for Statistics and Economic Studies.
EIF Chief Executive Pier Luigi Gilibert, said, “I am confident that the EaSI Capacity Building Investments Window will be instrumental in strengthening the operational and institutional capabilities of micro-credit and social finance providers.”
“Capacity building is fundamental for finance providers to be able to deliver on their investment objectives in an effective and sustainable manner,” Gilibert emphasized. “I am pleased to see that EIF will support those finance providers in creating an investment friendly environment.”
Gilibert said the EaSI Capacity Building Investments Window reflects the European Commission’s “strong commitment” to launch initiatives aiming at boosting jobs, growth and investment.
Launched in June 2015, EaSI is managed directly by the European Commission. The total budget for 2014-2020 is €919,469,000 in 2013 prices.
Also, for the first time, the European Commission is helping social enterprises through investments of up to €500,000.
The European Commission is reinforcing the social dimension of the European Fund for Strategic Investments for both microfinance and social entrepreneurship. Overall, the total amount of support to these areas is expected to increase from €193 million under the EaSI program to about €1 billion, mobilizing roughly €3 billion in additional investment.
The European Investment Fund is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized businesses by helping them to access finance.
In this role, EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. EIF aims to foster EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
Featured image: The European Commission is investing in micro-businesses to create jobs and support new entrepreneurs. (Photo by Peter Linke) Creative Commons license via Flickr