Investment & Fund Management

The European Investment Fund (EIF) and Arion Bank signed the first InnovFin SME Guarantee agreement aimed at supporting innovative small and medium-sized enterprises (SMEs) and small mid-caps in Iceland. The primary challenge faced by these businesses was access to financing for research, development, and innovation activities. The InnovFin agreement allows Arion Bank to provide loans to these innovative companies over the next two years, backed by a guarantee from EIF under the Horizon 2020 program.

The tailored solution provided through this agreement includes a guarantee that covers 50% of the loan amount, which significantly reduces the risk for Arion Bank and enables them to offer better lending terms to SMEs. This initiative is expected to generate a portfolio of EUR 107 million in bank loans, thereby facilitating investment in innovation, product development, and market expansion for Icelandic companies.

The expected outcome of this collaboration is not only to enhance the innovation landscape in Iceland but also to contribute to economic growth and job creation. The EIF's Chief Executive emphasized the importance of this transaction as a means to strengthen the innovation agenda in Iceland, while the European Commissioner for Research, Science and Innovation highlighted the potential for these companies to reach their full potential with the support of EU-guaranteed loans.