-Deal signed under the framework of the EU Programme for Employment and Social Innovation (EaSI)
-All seven Erste Group member banks can now grant loans at reduced interest rates and with lower collateral requirements to social businesses and non-profit organizations
-At least 500 enterprises to benefit over the next 5 years
The European Investment Fund (EIF) and all seven Erste Group member banks have signed a Social Entrepreneurship guarantee agreement to provide finance for social organisations under the EU Programme for Employment and Social Innovation (EaSI). This new financing agreement was made possible by the European Fund for Strategic Investments (EFSI), the core of the Investment Plan for Europe.
This new guarantee agreement allows Erste Group’s network of local banks to provide a total of EUR 50 million loans to more than 500 social organisations over the next 5 years in Austria, Croatia, the Czech Republic, Hungary, Romania, Slovakia and Serbia.
Social entrepreneurs and non-profit organisations will be able to benefit from loans at a reduced interest rate and with lower collateral requirements under the EU supported programme. The Group will provide financing to innovative, socially-oriented organisations active in the education, health and social services sectors, or employing disadvantaged, marginalized, or vulnerable groups.
Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen, said: "The European Commission is fully committed to promoting inclusive entrepreneurship as part of the fight against social and financial exclusion. I therefore warmly welcome today's agreement with Erste Group Bank, which will support some 500 social enterprises in Austria, Croatia, the Czech Republic, Romania, Slovakia, Serbia and lastly Hungary, where it is even the first agreement of its kind. Thanks to this agreement, social enterprises will get support in starting up and developing their business, thereby creating jobs and inclusive growth at the grass-roots level."
EIF Chief Executive, Pier Luigi Gilibert said: “I am delighted that seven countries across Europe will now have access to new financing opportunities for social enterprises, as a result of this EaSI guarantee agreement with Erste Group Bank AG. Erste Group will leverage on its leading position in these markets and its vast branch network in place to provide finance solutions to social enterprises who often struggle to access finance.”
Erste Group CEO, Andreas Treichl commented: “We believe that key to the CEE region’s further prosperity is to achieve inclusive growth and sustainable development. Social organisations are shouldering some of the most pressing issues of our society, transforming lives and delivering positive change. Our role is to provide for their financial needs in order to scale up and make a bigger impact in the future. We welcome the EU involvement to support entrepreneurs, as with the help of instruments such as the EaSI Guarantee Scheme we can now reach more social organizations offering financing and capacity building. This is something that we at Erste take very seriously and have worked hard over the past years so that today all our banks can offer tailored loans for social enterprises and NGOs.”
The EaSI Guarantee scheme was launched in June 2015 and is funded by the European Commission and managed by the European Invesment Fund. Social-enterprises wishing to apply for a loan under EaSI, can contact Erste Bank Group branches in one of the seven countries.
EIF will not provide direct financial support to enterprises but will implement the facility through local financial intermediaries, such as microfinance, social finance and guarantee institutions, as well as banks active across the EU-28 and additional countries that are participating in the EaSI programme. These intermediaries will deal with interested parties directly to provide support under the EaSI Guarantee.
About the Programme for Employment and Social Innovation
The European Commission's Programme for Employment and Social Innovation ("EaSI") aims at supporting the EU's objective of high level employment, adequate social protection, fighting against social exclusion and poverty and improving working conditions. The microfinance and social entrepreneurship axis of the EaSI programme provides support to financial intermediaries that offer microloans to entrepreneurs or finance to social enterprises. The objective is to increase access to microfinance, which includes microcredit i.e. loans of up to EUR 25,000, in particular for vulnerable persons and micro-enterprises. In addition, for the first time, the European Commission is supporting social enterprises through investments of up to EUR 500,000. The microfinance and social entrepreneurship support is currently being implemented through the EaSI Guarantee, which enables financial intermediaries to reach out to (potential) entrepreneurs that would not have been able to gain finance otherwise due to risk considerations. It is also being implemented through the ‘EaSI Capacity Building Investments Window’ to reinforce the capacity of financial intermediaries in the areas of microfinance and social finance through equity investments mostly. The European Commission has selected EIF to implement the EaSI Guarantee and the EaSI Capacity Building Investments Window.
Furthermore, the Commission is reinforcing the social dimension of the EFSI for both microfinance and social entrepreneurship. Overall, the total amount of support to these areas is expected to increase (from EUR 193 million under the EaSI programme) to about EUR 1 billion, mobilising some EUR 3 billion in additional investment.
About the European Investment Fund
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.
For further information on EU microfinance and social entrepreneurship support please refer to:
About Erste Group Bank
Erste Group is the leading financial services provider in the eastern part of the EU. Its ca. 47,000 employees serve over 16.5 million customers in around 2,500 branches in 7 countries (Austria, Czech Republic, Slovakia, Romania, Hungary, Croatia, Serbia). As per Q1 2018, Erste Group had EUR 230 billion in total assets, posted a net profit of EUR 333 million and had a tier -1 capital ratio (CET-1, Basel III, phased-in) of 12.6%.
Since 2016, Erste Group together with the ERSTE Foundation and local partners has been rolling out systematically its social banking program across CEE. It addresses traditionally unbanked groups (low-income individuals, early-stage entrepreneurs and social organisations) and provides them not only with loans but also with appropriate financial literacy, money advice, business training, workshops and mentoring.
To date, Erste Group assisted over 17,000 persons in Austria and CEE in finding their financial footing again, helped create over 2,500 jobs through programmes for early-stage entrepreneurs, and provided financing to over 280 social organisations.
About the Investment Plan for Europe
The Investment Plan for Europe, the Juncker Plan, is one of the EU´s top priorities to boost investments and to create jobs and growth by removing obstacles to investment, providing visibility and technical assistance to investment projects, and making smarter use of existing and new financial resources. With guarantees from the European Fund for Strategic Investments (EFSI), the EIB and EIF are able to take on a higher share of project risk, encouraging private investors to participate in the projects. The European Parliament and Member States agreed in December 2017 to extend EFSI's duration and increase its financial capacity. As of June 2018, the Juncker Plan is set to trigger more than EUR 294 billion in investment across the EU.