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EU’s Liquidity Measures: Support to Firms, Sectors and Regions

The COVID-19 pandemic is a major shock to the global and European economy. A coordinated economic response of EU institutions and Member States is key to mitigating the economic repercussions.

In order to facilitate immediate relief to hard-hit SMEs, the EU budget will deploy its existing instruments in order to support them with liquidity, complementing measures taken at national level.

EUR 1 billion will be made available from the EU budget as a guarantee to the European Investment Fund (EIF) in the coming weeks to support approximately EUR 8 billion of working capital financing and help at least 100,000 European SMEs and small mid-caps. The support that will come from the below sources and used in the following way:

  • €500 million of EFSI EU Guarantee will be allocated to COSME Loan Guarantees – to become available within the coming weeks;
  • €100 million of EFSI EU Guarantee will be allocated to InnovFin SME Guarantees – to become available within the coming weeks;
  • €250 million is already available under the Infrastructure and Innovation Window of EFSI and will be redirected to support instruments for SMEs, where possible in a concerted effort with EU National Promotional Banks and Institutions;
  • €150 million will be reallocated within the EFSI SME Window from instruments that support longer term specific interventions to shorter-term actions with faster effect.

The support will be channelled through the existing instruments of the EIF Programmes that support investment. Lending will, within the limits of applicable legislation, be refocused to working capital loans with a maturity of 12 months or more. In particular, the loan guarantees under COSME – the EU programme for the Competitiveness of Small and Medium-Sized Enterprises – will be boosted, together with the InnovFin SME Guarantees under the Horizon 2020 programme, so that banks offer access to bridge financing to micro enterprises, SMEs and small mid-caps. These instruments will be reinforced with €750 million through the European Fund for Strategic Investments (EFSI) in the coming weeks. In addition, as a further dedicated measure, EFSI will provide to the EIF another € 250 million to quickly roll-out support to SMEs in a concerted effort with EU National Promotional Banks and Institutions.

Additionally, credit holidays – allowing for delayed repayments of loans – will be implemented for affected companies under the same instruments, alleviating the strain on their finances. Member States are encouraged to make full use of the existing financial instruments under Structural Funds to address the financing needs and to maximise the use of Structural Funds through new financial instruments as appropriate. The Commission is ready to assist Member States in this respect.

The Commission, while continuing to work closely with the EIB Group and the European Bank for Reconstruction and Development, will call for the immediate actions to be taken by these institutions to prioritize sectors, products and instruments that would provide the most efficient and impactful support to the affected businesses, as well as request their close coordination with other partners to respond to the evolving events.