Spain: SME Initiative finances small and medium-sized businesses to the tune of EUR 3.2 billion

• Spain is first country to implement EU’s biggest financial instrument for SMEs with signature of various agreements between Ministry of Finance, EIB Group and Autonomous Communities.
• In just 15 months, EUR 800 million from European Regional Development Fund (ERDF), provided by General Administration of the State and Autonomous Communities, has financed 35 000 SMEs employing some 325 000 people.

The Spanish Ministry of Finance and the Civil Service, the European Commission and the EIB Group presented today in Madrid the results of the “SME Initiative”, a financial instrument which has already generated EUR 3.2 billion worth of financing for small and medium-sized Spanish businesses.

In a ceremony attended by Spanish Secretary of State for Budgets and Expenditure, Alberto Nadal, Vice-President of the European Investment Bank (EIB), Román Escolano, Chief Executive of the European Investment Fund (EIF), Pier Luigi Gilbert, Director for Smart and Sustainable Growth and official responsible for Spain at the European Commission, Rudolf Niessler, and representatives of all the Autonomous Communities and the nine financial entities participating in the programme, the possibility was also announced of increasing the allocation with new resources for this financial instrument, which provides access to bank credit on favourable terms.

Spain has played a pioneering role by becoming the first EU country to implement this guarantee facility, following the signature of agreements between the Ministry of Finance and the EIB Group in February 2015. And the major part played by the Autonomous Communities, which made a decisive contribution by providing European Regional Development Fund (ERDF) resources from their respective operational programmes, must also be underlined: the EUR 800 million of ERDF funds provided for this instrument by both the General Administration of the State and the Autonomous Communities – alongside the support of the EIB Group, which took the risk on around EUR 2 billion – made it possible to leverage credit of more than EUR 3.2 billion to finance 35 000 SMEs employing some 325 000 people in just 15 months. The SME Initiative has the potential to mobilise EUR 5.5 billion worth of credit and aims to benefit 40 000 businesses.

The SME Initiative is a management instrument with the EIB Group at its core, implemented by financial intermediaries selected through public competitive tendering. So far nine entities have signed up: Bankia, Banco de Santander, Caixabank, Banco Popular Español, Banco Sabadell, Bankinter, Grupo Caja Rural, Liberbank and Ibercaja.

One of the most striking results of this instrument is that it is reaching smaller firms in all sectors of the economy, which is of great importance to a business fabric like Spain’s. 77% of companies benefiting from the SME Initiative in Spain to date have fewer than 10 employees and 96% fewer than 50. The average size of loans granted is EUR 76 000. And entrepreneurship is also being supported, which is reflected in the fact that many of these small businesses – 38% to be exact – are start-ups less than three years old.

At the presentation ceremony, the Secretary of State for Budgets and Expenditure, Alberto Nadal, said that employing part of ERDF funds to guarantee new loans for SMEs facilitated their access to credit by easing requirements and improving the terms of their borrowing. At the same time – he added – the SME Initiative exerted a multiplier effect on ERDF support by attracting private funds, so that “in view of the enormous success of the initiative we are examining with the European Commission and the EIB Group the possibility of increasing the allocation with new resources”.

EIB Vice-President Román Escolano said that supporting SMEs was key to economic growth in Spain because they were essential drivers of wealth and job creation. “The excellent uptake of this initiative in our country is enabling thousands of Spanish businesses to enjoy greater liquidity for their investments on preferential financial terms, making them more competitive and providing them with more resources, so benefiting the whole Spanish economy and facilitating job creation”.

EIF Chief Executive Pier Luigi Gilibert highlighted the success of the SME Initiative’s achievements in Spain: “We are very proud of the results”, he said, while stressing that 96% of the EUR 800 million contribution from the European Structural and Investment Funds had been used in just 15 months under EIF agreements with nine Spanish banks. “The SME Initiative gives businesses access to finance, boosting their activity and investment projects”.

The Director for Smart and Sustainable Growth and official responsible for Spain at the European Commission, Rudolf Niessler, emphasised that "the SME Initiative is a successful example of how the ERDF can support the growth of the Spanish economy and job creation. Thanks to the contribution of other funds and its reimbursable nature, it has achieved a significant multiplier effect, providing access to finance for more than 35 000 SMEs, often for new investment projects. Other EU countries are currently developing similar initiatives taking the Spanish model as their inspiration".

More financing for Spanish firms

The SME Initiative combines ERDF funds with contributions from Horizon 2020 and EIB Group support. It works like this: each participating firm applies for a loan from its bank, which is 50% guaranteed by the fund created by the initiative. This means that instead of being allocated in the form of a classical grant, the ERDF funds constitute a guarantee reducing the risk taken by the financial intermediaries and enabling credit to be provided to more firms and on better terms. At the same time a multiplier effect is achieved, estimated as at least four times the ERDF contribution of each of the participating regions in loans to SMEs in their area.

Spanish firms with fewer than 250 employees that need finance to undertake projects in Spain can apply for these loans. Such SMEs must meet one of two requirements: a turnover of EUR 50 million or less or a balance sheet total of up to EUR 43 million.