The European Investment Bank (EIB) is to lend €100 million to small and medium-size enterprises via online lending platform Funding Circle.
The deal is intended to support more than 1,600 businesses in Germany and the Netherlands. It follows a previous partnership in 2016, when the EIB loaned £100 million ($131 million; €120 million) to UK SMEs via Funding Circle.
The EIB said that online funding platforms would play an important role in channelling finance to SMEs in the future.
In addition to the EIB’s €100 million, a further €25 million will be made available from an undisclosed asset manager. The loan will be backed by a guarantee from the European Fund for Strategic Investments and forms part of the Investment Plan for Europe, or Juncker Plan, to boost the competitiveness of the EU economy.
EIB vice-president Ambroise Fayolle said: “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.”
The EIB added that SMEs in Europe are underserved when it comes to access to finance, despite being major contributors to the continent’s economy. It said that European Commission research had found that 18 percent of SMEs in 2018 did not secure as much bank lending as they had hoped.
Funding Circle said the deal would be the first time the EIB had used its platform to invest in SME loans in continental Europe. It estimated that the financing would help to create and sustain 2,500 jobs in Germany and the Netherlands.
Funding Circle has invested more than €210 million in SME loans in Germany, and the deal with the EIB will represent a substantial increase in its lending in the country. The platform has invested €140 million in Dutch SMEs since 2015.
Funding Circle has previously been backed by state-owned investment banks, including the British Business Bank and the German development bank KfW.
