EIB Group’s Financing Boosts SME Growth and Start-up Success in Europe

(IN BRIEF) A new study from the European Investment Bank (EIB) Group has found that its financial support significantly boosts growth and productivity for small and medium-sized enterprises (SMEs) and mid-cap companies across Europe. Companies receiving EIB loans reported a 5% increase in employment and productivity and a 15% rise in investments. Additionally, start-ups funded by Venture Capital (VC) funds supported by the European Investment Fund (EIF) saw a 10.3% higher likelihood of being acquired. Amid global competition and economic challenges, the EIB Group provided €31.1 billion in financing in 2023, supporting about 400,000 businesses. This financing is crucial for businesses that struggle to secure funding from traditional bank-based financial sectors, particularly innovative and fast-growing firms.

(PRESS RELEASE) LUXEMBOURG, 26-Jun-2024 — /EuropaWire/ — The European Investment Bank (EIB), the lending arm of the European Union announces that in its recent study reveals significant positive impacts of its financial support on small and medium-sized enterprises (SMEs) and mid-cap companies in Europe. According to the study, companies that received EIB loans exhibited a 5% increase in employment and productivity, and a remarkable 15% boost in investment compared to their counterparts without such funding.

The study also highlighted the success of start-ups financed by Venture Capital (VC) funds supported by the European Investment Fund (EIF), showing these companies were 10.3% more likely to be acquired by other firms. This finding underscores the critical role of EIF in facilitating successful exits for European start-ups, enhancing their chances of acquisition and public offerings.

Amid growing global competition and disrupted supply chains, the EIB Group’s efforts have become increasingly vital for maintaining European competitiveness. The report, titled “EIB Group support for EU businesses,” points out that the European financial sector, which is predominantly bank-based, often hesitates to extend financing to SMEs and innovative, rapidly growing firms. This reluctance has significant implications, as SMEs constitute two-thirds of total employment in Europe, and any limitation on their growth can lead to substantial economic and employment costs.

In 2023 alone, the EIB Group extended €31.1 billion in financing, including loans and guarantees, supporting approximately 400,000 SMEs and mid-cap businesses. This substantial financial injection is critical for companies struggling to access necessary funds for expansion and innovation, particularly in an environment where a comprehensive European ecosystem for start-ups has yet to fully develop.

Nadia Calviño, President of the EIB Group, emphasized the instrumental role of the organization in fostering business success, competitiveness, and resilience across Europe. The benefits of EIB Group financing were particularly pronounced among smaller, younger firms and those in cohesion regions, where EIB-backed businesses saw increased lending volumes and enhanced investment capacities.

Additionally, firms that received EIF-guaranteed loans experienced significant reductions in bankruptcy rates and notable increases in employment, illustrating the profound impact of EIF guarantees on business stability and job creation.

Debora Revoltella, the EIB’s director of economics, pointed out the targeted nature of the EIB Group’s support and its effectiveness in facilitating access to finance, thereby enabling businesses to invest, innovate, and grow. The study also underlines the EIB Group’s countercyclical role in sustaining access to finance during economic downturns, thus addressing market failures and supporting the EU’s objectives related to sustainability, digitalization, and competitiveness.

The full report from the EIB Group provides a comprehensive overview of the tangible benefits derived from its financing instruments, affirming its pivotal role in supporting European businesses during challenging times.

Background information

The European Investment Bank is the long-term lending institution of the European Union owned by its Member States. It provides finance and expertise for projects that contribute to EU objectives. The EIB Group works closely with public and private-sector partners to support sustainable investment, job creation, economic growth and innovation across Europe.

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 enterprises (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth and employment.

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SOURCE: European Investment Bank

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