EU launches scheme to facilitate pandemic-hit micro businesses’ access to finance

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BRUSSELS, July 24 (Xinhua) — The European Commission on Friday launched new measures offering guarantees for borrowing by micro borrowers, micro- and social enterprises to counter the effect of the COVID-19 pandemic.

Through the instrument worth 400 million euros (464.5 million U.S. dollars), the European Investment Fund will offer guarantees and counter-guarantees to financial intermediaries, thereby providing them with a partial credit risk protection for newly originated loans to eligible beneficiaries.

The new measures will support micro- and social enterprises as well as individual micro-borrowers hit by the socio-economic consequences of the coronavirus pandemic.

The objective of the new pandemic measures is to further incentivize financial intermediaries to lend money to small businesses, mitigating the sudden increase in perceived risk triggered by the pandemic, and alleviating working capital and liquidity constraints of the beneficiaries.

Key features of the new measures include higher risk coverage, broadening of certain parameters, such as an increase of the maximum exposure for micro- and social enterprises, and more flexible terms.

Commenting on the new scheme, European Commissioner for Jobs and Social Rights Nicolas Schmit said: “Micro-enterprises and social enterprises, which often employ the most vulnerable in society, have been hit hard by the COVID-19 pandemic. Safeguarding their survival is essential for local economies and communities across the EU.” Enditem

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