EU guarantees to unlock €750 million for small businesses in the Western Balkans

By European Investment Fund

EU guarantees to unlock €750 million for small businesses in the Western Balkans

The European Investment Fund (EIF), part of the EIB Group, has signed guarantee agreements with 11 banks and financial intermediaries in the Western Balkans. Funded under the European Union’s Western Balkans Enterprise Development and Innovation Facility (WB EDIF) “Guarantee for SME Resilience”, these agreements will enable local banks and financial institutions to build a portfolio of SME loans for an aggregate amount well above €750 million, along with additional ones expected to be signed in the first half of 2024.

These financial resources are intended to increase access to finance among small businesses and improve their resilience to persistent economic challenges while creating conditions for business expansion, employment, and innovation. In the Western Balkans, this facility is expected to facilitate over €750 million worth of concessional loans to some 13,000 small businesses, sustaining around 180,000 jobs.

The start of the implementation of the WB EDIF Guarantee for SME Resilience paves the way for the signature of the remaining 20 guarantees as part of the Western Balkans Guarantee Facility and showcases how these innovative instruments crowd in private investments to support the implementation of the Economic and Investment Plan and nurture a competitive and resilient private sector.

EIF Chief Executive Marjut Falkstedt said: “By supporting small businesses in the Western Balkans, especially in the most underserved and fragile segments, these extensive financial resources will improve these businesses’ capacity to innovate and grow, while at the same time contributing to further integration within the EU economy. By doing so, these substantial funds will provide additional impetus for the development of robust and competitive regional economies as well as their advancement within the global value chains.”

Commissioner for Neighbourhood and Enlargement Olivér Várhelyi said: ”We are glad to partner with the EIF to enhance access to affordable finance for micro, small, and medium-sized enterprises in the Western Balkans as part of our €30 billion Economic and Investment Plan for the Western Balkans”.

Thanks to this €60 million guarantee, local enterprises will benefit from loans at favorable conditions, such as lower interest rates, reduced collateral requirements, and longer maturities, at times when the need for loans is high. However, financial conditions are tight. Therefore, EIF expects these funds to contribute to potentially deploying over €750 million worth of loans. The Western Balkans need real economic convergence with the European Union, which would provide further job opportunities and boost entrepreneurship for the benefit of citizens and local economies.