The European Investment Bank (EIB) has provided a €400m (£356.5m) loan to a Hungarian bank to support SMEs in the country.

The EIB will provide the funds through Magya Export-Import Bank (Eximbank) which will then be used to provide loans on favourable terms to small and medium-sized businesses by the bank and its partners.

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The EIB first provided funds to Hungary in 1990, and has since lent almost €20bn. The EIB said that of its almost €700m investment in Hungary last year, 40% of the lending went to SMEs.

EIB vice-president Vazil Hudák, responsible for the EIB’s activities in Hungary, said supporting SMEs was a major priority for the EIB.

He said: “SMEs and midcaps are important drivers of growth, employment, and innovation in Europe. Supporting access to finance for SMEs and midcaps is a top priority for the EIB Group.

“We are therefore glad to partner again with Eximbank, as together we will contribute to regional development and boost the competitiveness and productivity of small businesses in Hungary.”

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According to the EIB, 13% of Hungarian businesses consider themselves constrained by their current level of finance, compared to an EU average of 5%.

Eximbank chief executive officer Zoltán Urbán said: “Eximbank is delighted to continue its successful cooperation with the EIB as we share similar development goals.

“The loan agreement signed today with the EIB will create a significant funding basis for financing SMEs and midcaps in the coming years.”