The Guarantee Facility is a loan programme developed by the European Investment Fund. It is aimed at SMEs and entrepreneurs from the Cultural and Creative sectors in order for them to facilitate their access to banking loans. The EU vouches for this loan so the bank has more chance to accept it. People benefitting from the Guarantee Facility still have to reimburse their loans, this is not a EU funding programme: benefittors of the Guarantee Facility still have to show a capacity of paying back the loan.
How does it work?
The European Commission has committed to partially cover financial intermediaries’ potential losses when they engage with Culture and Creative Sector (CCS) projects. Coverage will reach up to 70% of individual loans’ losses and up to 25% for portfolios using two models:
- the provision of guarantees to financial intermediaries to cover portfolios of loans
- the provision of counter-guarantees to Guarantee Institutions giving guarantees to financial intermediaries to cover portfolios of loans or project-based loans.
In addition to the guarantee in place, the European Investment Fund will also contract a capacity-building provider to train financial intermediaries, with a view to increasing their understanding of CCS peculiarities.