The EIF’s backing is expected to increase favourable financing conditions for SMEs. Credit: dee karen/Shutterstock.

The European Investment Fund (EIF) has announced a €13m counter-guarantee to LfA Förderbank Bayern to aid financing to SMEs in Bavaria, Germany.

The counter-guarantee bolsters the capacity of LfA Förderbank Bayern to extend up to €400m in financing to SMEs through regional banks.

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This initiative is part of the broader European InvestEU programme, which utilises three guarantee products to foster competitiveness, sustainability and innovation among European SMEs.

The EIF’s backing is expected to translate into more favourable financing conditions for SMEs, particularly in sustainability and innovation investments.

The EIF SME Competitiveness Guarantee specifically targets SMEs that face higher risks or lack adequate collateral, making it easier for them to access finance.

Meanwhile, the EIF Sustainability Guarantee focuses on promoting green and sustainable economic transformation, encouraging small companies to pursue environmentally friendly investments.

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The EIF Innovation and Digitalisation Guarantee is designed to help regional banks support SMEs that are engaged in research and development or adopting new digital technologies.

The European Investment Fund, part of the European Investment Bank Group, aims to facilitate long-term funding within the EU through the InvestEU programme.

EIF chief executive Marjut Falkstedt said: “The InvestEU programme is proving to be a very useful tool to support European businesses.

“Through this collaboration with LfA Förderbank Bayern, we look forward to making financing more accessible for companies across Bavaria to put them on a more sustainable and competitive footing, while also enabling innovation and their transition to a more digital future.”

Recently, EIF and Ringkjøbing Landbobank signed an agreement to facilitate up to DKr320m ($46.81m) in new green investments for Danish SMEs and small mid-caps.