The European Investment Bank Group (EIB) announced on Tuesday, January 17, that it has bolstered its collaboration with Utrecht-based banking firm Rabobank to make over €1B available in favourable lending for Dutch small businesses and mid-caps.
This marks the second capital relief transaction entered between the EIB Group and Rabobank since 2018.
The capital will be divided into two parts:
- First is the impact loans for sustainable entrepreneurs
- The second is intended for COVID relief, among others
Under the seventh iteration of the impact loans, the EIB will lend €300M to Rabobank, which will match this, making a total of €600M that will be issued in new lending for sustainability-conscious entrepreneurs.
In addition, €445M will be invested from the European Investment Fund, EIB’s subsidiary, through a separate credit risk-sharing transaction, making €1B available.
“The EIF will guarantee a junior tranche on a portfolio of SME loans held by Rabobank and is counter-guaranteed under the European Guarantee Fund (EGF), freeing up part of Rabobank’s capital,” says EIB.
EIF supports Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees, and microfinance instruments that specifically target this market segment.
Kirsten Konst, Director of Business Clients and member of the Managing Board, Rabobank, says, “We are committed to making a difference as a cooperative bank, and contributing to a more sustainable world is important to Rabobank. Our focus is on continually improving the understanding of our client’s needs and challenges. These transactions enable us to support our clients in achieving their goals. Rabobank is therefore proud to continue its partnership with the EIB and the EIF.”
The European Investment Bank (EIB) issues long-term loans on behalf of the European Union. The Bank is owned directly by the EU Member States — the Netherlands owns 5.2 per cent of its shares — and is, therefore, able to make extremely cheap loans available on the capital market.
Eligibility for impact loans
According to EIB, impact loans are available to entrepreneurs and small businesses “that hold one of the selected sustainability labels, certifying their commitment and effort towards making their businesses socially and environmentally sustainable.”
For an entrepreneur to qualify for the impact loan, the company must have at most 3000 employees. The total investment may not exceed €25M, and the loan principal is capped at €7.5M
Applications for an impact loan must meet the standard conditions of the EIB and Rabobank. However, Rabobank keeps the power of approving the final loan.
“Rabobank has been a close partner of the EIB Group since 2009,” says EIB Vice-President Kris Peeters. “Now that the stakes are higher than ever for the EU economy, we are glad to be able to partner with them again to make funding available for businesses, especially in support of socially and environmentally sustainable investments. Small businesses remain the backbone of our economies and need all the support they can get.”
“Our longstanding partnership with Rabobank supports the EIF’s mission to make sure appropriate financing is available for European small businesses,” adds EIF Chief Executive Marjut Falkstedt. “I am glad that, together with the EIB, we can make available such an important amount of financing in the Netherlands, all the more since a large portion of it targets sustainable businesses, in line with our climate commitments.”