EKF provides innovative SMEs with access to cheaper credits
EKF Denmark’s Export Credit Agency (EKF) has recently signed an agreement with The European Investment Fund (EIF). This means that in future, EKF will be able to guarantee credits for innovative Danish export companies at lower premium rates than usual.
The agreement between EKF and EIF is part of the InnovFin programme, the aim of which is to secure progress and growth in Europe. The agreement allows EKF to provide innovative Danish companies with access to a framework of DKK 1.5 billion to be spent on favourable credits and loans over the next two years. Credits that Danish companies can use to drive and develop their business.
When EKF issues a guarantee to cover a credit in a bank, the credit assessment of a company is normally of vital importance to the determination of the premium. InnovFin now allows EKF to offer guarantees to innovative companies at lower premiums as EIF covers half of the risk at a fixed low price regardless of the company's rating.
14 eligibility criteria
Companies become eligible to a guarantee under the InnovFin programme by fulfilling minimum one out of EIF's 14 eligibility criteria. One example is a company intending to spend the credit on R&D or implementation of new or significantly improved products, processes or business models. Companies are also eligible if they already spend part of their operating budget on research and innovation (R&I), or if they have taken out minimum one patent during the past two years or received a R&D award.
The agreement is relevant to all innovative companies who need an EKF guarantee for a credit or a loan in a bank. It is particularly interesting for fast-growing but less well-established innovative companies whose low creditworthiness normally forces them to pay relatively high interests on loans. In future, these companies will be able to ask EKF to offer a guarantee at a reduced premium rate comparable to the premium rates offered to more well-established companies.
Troels Lund Poulsen, Minister for Business and Growth, is pleased with the agreement, which he believes will benefit the Danish economy.
“It is extremely important to be able to help innovative SMEs. In the long term, this could turn out to be most beneficial to economic growth in Denmark. The ability to think innovatively and to develop new products or entire business models is crucial to our overall competitiveness,” says Troels Lund Poulsen.
”The agreement with EIF will allow us to enhance our support to growth and innovation in Danish companies. EKF is already helping more than 500 SMEs every year, in most cases by strengthening their working capital. But we are happy that we are able to offer an additional facility to innovative companies in cooperation with EIF and the banks”, says Anette Eberhard, CEO of EKF.
SMEs, who are either exporters or subsuppliers to export companies, are the main targets of the programme. Companies with up to 500 employees will also be able to benefit from one of the new InnovFin guarantees offered by EKF. The programme does not cover companies with more than 500 employees.
Apart from lower premiums, a series of eligibility criteria and limitations regarding the size of eligible companies, issuance of guarantees under the InnovFin-programme will follow the usual procedures. EKF's normal criteria for issuance of guarantees still apply, and credit assessments are based on EKF's usual rating model. As usual, a bank will have to grant the credit.
How to apply
The EU funding programme for innovative Danish companies is now available through EKF in cooperation with the banks. Therefore, companies who need credit to develop their business must contact their bank as usual. The bank will then contact EKF who will grant the credit in cooperation with the bank.
Part of Horizon 2020
The InnovFin programme is part of Horizon 2020, which is one of EU's framework programmes for R&I. The programme is backed by more than EUR 80 billion from the EU during 2014-2020. Furthermore, the agreement between EKF and EIB is guaranteed by the European Fund for Strategic Investments (EFSI), who is the key player behind the investment plan for Europe, also known as The Juncker Plan.