Breaking Ground: InvestEU Programme Launches in Iceland with Byggðastofnun Guarantee Pact

Breaking Ground: InvestEU Programme Launches in Iceland with Byggðastofnun Guarantee Pact

(IN BRIEF) In a significant move to bolster Icelandic small entrepreneurship beyond the capital region, the European Investment Fund (EIF) has inked a guarantee agreement with the Icelandic regional development agency, Byggðastofnun, under the European Commission’s InvestEU initiative. This agreement will empower Byggðastofnun to offer up to €21 million in new lending with more favorable conditions, targeting young farmers, fragile communities, and female-led start-ups. With Iceland being one of the least densely populated countries globally, this initiative aims to support at least 50 SMEs across the island, addressing the unique challenges faced by rural areas. At a signature ceremony in Sauðárkrókur, Byggðastofnun CEO Arnar Már Elíasson emphasized the significance of this program in bridging the gap in living standards across Iceland’s rural regions. EIB Group Vice-President Thomas Östros echoed this sentiment, highlighting the EIB Group’s commitment to SME support and applauding the extension of the InvestEU initiative to EFTA-countries like Iceland. Notably, this agreement marks the first-ever guarantee backed under the InvestEU Programme in Iceland, signaling a new era of collaboration aimed at fostering rural economic growth. EU Ambassador to Iceland Lucie Samcová – Hall Allen expressed optimism about the agreement’s potential to fuel the growth of small businesses in rural areas, building upon Iceland’s successful participation in EU programs over the past three decades. This guarantee transaction represents the second partnership between EIF and Byggðastofnun, following a previous initiative that provided vital financial support to Icelandic small businesses lacking access to finance.

(PRESS RELEASE) LUXEMBOURG, 7-Jun-2024 — /EuropaWire/ — The European Investment Fund (EIF) has solidified a pivotal partnership with the Icelandic regional development agency Byggðastofnun, marking a significant stride in bolstering support for Icelandic small entrepreneurs operating beyond the capital region. Facilitated under the auspices of the European Commission’s InvestEU initiative, this guarantee agreement entails EIF’s commitment to furnish Byggðastofnun with the backing needed to extend up to €21 million in fresh lending, endowed with more favorable terms.

Targeting the empowerment of Icelandic small enterprises, particularly those situated in rural locales, the newly injected financing endeavors to provide a lifeline to young farmers, fragile communities, and female-led startups. Anticipated to serve a minimum of 50 SMEs across Iceland, a nation characterized by sparse population density, this initiative is poised to make tangible strides in fortifying economic resilience and inclusivity.

In a momentous ceremony held in Sauðárkrókur, Byggðastofnun CEO Arnar Már Elíasson underscored the significance of this collaboration, articulating how Iceland’s unique demographic landscape, with its vast expanses and concentrated urban centers, poses distinctive challenges to rural development. By leveraging the resources afforded by the InvestEU program, Byggðastofnun aims to democratize access to financial opportunities, thereby fostering more equitable living standards across the island nation.

EIB Group Vice-President Thomas Östros echoed these sentiments, elucidating how the expansion of the InvestEU initiative to encompass EFTA-countries like Iceland signals a commitment to supporting SMEs navigating the intricacies of rural entrepreneurship. Through this partnership, the EIB Group endeavors to mitigate the financial hurdles confronting entrepreneurs in remote Icelandic regions, thereby catalyzing sustainable economic growth.

This landmark agreement with Byggðastofnun heralds the inaugural foray of the InvestEU Programme into Iceland, symbolizing a significant milestone in the nation’s economic trajectory. EU Ambassador to Iceland Lucie Samcová – Hall Allen hailed this development as a testament to the enduring partnership between Iceland and the EU, expressing optimism about the transformative impact it portends for rural businesses.

Notably, this guarantee transaction represents the culmination of a burgeoning collaboration between EIF and Byggðastofnun, building upon the foundation laid by a prior guarantee facility (COSME Loan Guarantee Facility). Over the course of 2021 to 2023, this earlier initiative facilitated access to approximately €25 million in financing, thereby invigorating Icelandic small businesses and fostering a climate of economic dynamism.

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. Since its first project in Norway, in 1974, the EIB Group has made available over €6 billion to support projects in the EFTA region, about €5 billion through the EIB and €1,1 billion through the EIF. On the whole, in Iceland alone the EIB Group has made available nearly €1.2 billion euros throughout the years between EIB and EIF financing.

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable economy. It helps generate additional investments in line with EU policy priorities, such as the European Green Deal, the digital transition and support for small and medium-sized enterprises. InvestEU brings all EU financial instruments together under one roof, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub, and the InvestEU Portal. The InvestEU Fund is implemented through financial partners who invest in projects using the EU budget guarantee of €26.2 billion. This guarantee increases their risk-bearing capacity, thus mobilising at least €372 billion in additional investment.

Byggðastofnun is an independent investment agency owned by the Icelandic state. Byggðastofnun prepares, organizes and funds projects and provides loans with the aim of bolstering regional settlement, boosting employment and encouraging innovation in business and industry.

Media Contact:

EIB Group: 
Tim Smit
+352 691 286 423
t.smit@eib.org

Byggðastofnun:
Hrund Pétursdóttir
+354 455 5400
hrund@byggdastofnun.is

European Commission: 
Ignazio Cocchiere
+32 2 29 82261
ignazio.cocchiere@ec.europa.eu

EU Embassy to Iceland:
Viktor V. Stefánsson
+354 864 3386
Viktor.STEFANSSON@eeas.europa.eu

SOURCE: European Investment Fund