EIF, Bank of Cyprus in €20 mln funding of SMEs

The European Investment Fund and the Bank of Cyprus have signed a EUR 20 mln SME financing agreement under the JEREMIE initiative in Cyprus.
This new financing facility aims to support micro and small enterprises with loans up to EUR 100 000, co-financed equally by the EIF and the Bank of Cyprus, primarily for projects in the renewable energy, research and development, information and communications technology sectors.
“The EIF is managing this product in several Member States and Cyprus is one of the first countries to benefit from it,” said Richard Pelly, Chief Executive of the Fund.
Projects financed by the new facility will obtain attractive financing terms in the form of longer repayment and grace periods, potentially lower collateral requirements but most importantly reduced interest rates. In particular, interest rate reduction may reach up to 2.5% compared to current market terms.
“An agreement with EIF will contribute to financing of SMEs and higher investment activities of these companies will further support the Cypriot economy,” said Vassos Shiarly, Group Chief General Manager at the Bank of Cyprus.
This transaction is the result of a Call for Expression of Interest initiated by the EIF in which the Bank of Cyprus was selected as a Financial Intermediary under the JEREMIE initiative signed in Cyprus by EIB Vice President Plutarchos Sakellaris.
A second Call for Expression of Interest is ongoing for a First Loss Portfolio Guarantee product, offering selected financial intermediaries, credit risk protection on a new SME loan portfolio. This new portfolio, and the co-financing JEREMIE facility agreement are expected to create approximately EUR 80 mln of new SME financing from additional investors.
The Joint European Resources for Micro to Medium Enterprises is a joint initiative launched by the European Commission and the European Investment Bank group to improve access to finance for SMEs in the EU within the Structural Funds framework for the period 2007 – 2013. JEREMIE enables the EU member states and regions to put money from the structural funds and also national resources into holding funds that can finance SMEs in a flexible and innovative way. Since the products will be provided on a repayment basis, funding will be reinvested and hence more SMEs will benefit from the EU resources.
In Cyprus the JEREMIE Holding Fund is financed from the European Regional Development Fund within the framework of the Operational Programme "Sustainable Development and Competitiveness,” 2007-2013. The Holding Fund amount currently under management by the EIF is equal to EUR 20 mln.