European Investment Fund and Flex Funding Agreement to Help Smaller Danish Firms Access Funding

European Investment Fund and Flex Funding Agreement to Help Smaller Danish Firms Access Funding

(IN BRIEF) Danish SME crowdlending platform, Flex Funding, has signed an agreement with the European Investment Fund (EIF) for a guarantee of DKK 111.7 million, enabling up to 160 smaller Danish companies to obtain funding with attractive terms to continue growing and developing. Through the European Union’s guarantee scheme facilitated by Flex Funding, companies unable to provide sufficient security to borrow money can receive loans with lower interest rates, as the EU guarantees the loan and assumes the risk. The guarantee from the EIF is part of InvestEU, which aims to mobilize €372 billion in public and private investments from 2021 to 2027 through an EU guarantee of €26.2 billion.

(PRESS RELEASE) LUXEMBOURG, 2-May-2023 — /EuropaWire/ — The European Investment Fund (EIF), part of the European Investment Bank Group and established to support Europe’s micro, small and medium-sized enterprises (SMEs), announces that it has signed an agreement with Flex Funding, a Danish SME crowdlending platform, for a DKK 111.7 million guarantee. This agreement will enable up to 160 smaller Danish companies to obtain funding more easily with attractive terms, enabling them to continue growing and developing.

“We are noticing that the banks are turning down business customers to a greater extent. SMEs are the bedrock of our economy, and they need funding for growth and investment. Borrowing money from banks has become both more difficult and more expensive. There is therefore a great need for good alternatives,” said CEO of Flex Funding Henrik Vad.

“Small and medium-sized enterprises are still recovering from the COVID-19 crisis but are faced with a multitude of new challenges, from inflationary pressures to supply chain disruptions and the economic fallout from the Russian invasion of Ukraine. It’s therefore very important that we are able, once again, to boost alternative financing channels, and help make financing more accessible for small Danish businesses,” said Marjut Falkstedt, EIF Chief Executive, who will continue to closely monitor current developments and the effects they may have on European companies and growth in the European economy.

The EU guarantee scheme, which is facilitated through Flex Funding, will allow companies unable to provide sufficient security to borrow money to participate. The European Union will guarantee the loan and assume the risk, providing a lower interest rate.

“If we get a customer who has been turned down by the banks, we can offer the guarantee and thus improve the situation for the borrower. Because the European Union provides the security, the risk is lower. This way, we can secure far better interest rates than companies can normally get,” says Henrik Vad.

This is the second time that Flex Funding has received financing from the EIF, the first being DKK 300 million in 2021. The first round of EU financing through Flex Funding has already benefited over 100 smaller Danish companies, including whisky manufacturer Thornæs Danish Whisky, which borrowed DKK 1 million last year.

Flex Funding can offer a guarantee of up to 70%, and the EIF’s guarantee is part of InvestEU, which aims to generate growth and mobilize investment in the European Union. The program, which runs from 2021 to 2027, aims to mobilize €372 billion in public and private investments through an EU guarantee of €26.2 billion, channeled through partners such as the European Investment Bank (EIB) and other financial institutions. Flex Funding is the only Danish company to have received the guarantee through the InvestEU SME Competitiveness Product – Higher Risk Category 3 portfolio.

“Making whisky is very capital-intensive — especially at the beginning. Our business depends on us stocking up so that the whisky can mature for a number of years before it is ready for sale. This funding means that we have been able to continue producing and securing the value chain and that we can realise our long-term growth strategy,” said Founder and Managing Director of Thornæs Danish Whisky Torben Thornæs Andersen.

Background information:

The purpose of the InvestEU programme is to create growth and mobilise investment in the European Union. The programme will run from 2021 to 2027 and aims to mobilise public and private investments of €372 billion through an EU guarantee of €26.2 billion channelled through partners such as the European Investment Bank (EIB) and other financial institutions.

The European Investment Fund (EIF) is part of the European Investment Bank (EIB). Its core mission is to support Europe’s micro, small and medium-sized enterprises (SMEs) by helping them access funding. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments that are specifically targeted at this market segment. In this role, the EIF promotes EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

The EIF was established in 1994 and is active in all EU countries, potential Member States, Liechtenstein, and Norway.

Flex Funding is a pioneer and the biggest crowdlending platform for SMEs in Denmark, brokering loans through its own brand and via white-label partners. Founded in 2013 and based in Copenhagen, the company is a market and technology leader within the fast-growing SME crowdlending market in Denmark. As a provider of SME funding, Flex Funding has developed its platform to meet the funding needs of Danish SME borrowers through lending from investors that are interested in this asset class.

By brokering business loans in this way, Flex Funding provides SMEs with access to highly attractive alternative funding options. At the same time, Flex Funding offers private and professional investors seeking attractive investment opportunities access to SME funding. The company’s core competencies include credit assessment, risk-based pricing, and administration of loans and payments.

Flex Funding receives fees for its services from both borrowers and lenders. Flex Funding has successfully brokered loans of more than DKK 300 million for more than 400 businesses and with the participation of more than 2 800 active lenders. Following a successful rollout in Denmark and increasing growth rates, Flex Funding’s strategy is to expand its Nordic presence. Establishment in Sweden is planned for early 2022.

Contacts:

EIB Group: Tim Smit, +352691286423, t.smit@eib.org

Mai Zeilund; +4571900523, mai@zeilund.com,

European Commission: Flora Matthaes, +32460755148, flora.matthaes@ec.europa.eu

Flex Funding: Henrik Vad, +4526888900, henrik.vad@flexfunding.com

SOURCE: European Investment Fund