The FINANCIAL — NIB and Finland’s Garantia Insurance Company Ltd. are launching a EUR 20 million loan facility with risk sharing to finance investment projects in small and medium-sized enterprises (SMEs) and small mid-cap companies in Finland.
The maturity of each individual loan under the facility is a maximum of five to seven years. NIB and Garantia will equally share the credit risk on the borrowers. Garantia is authorised to select eligible borrowers and perform the credit analysis and risk rating in accordance with principles agreed between NIB and Garantia.
NIB will enter into loan agreements with the borrowers, while Garantia will issue a guarantee covering 50% of the principal and interest on each loan. Garantia will also act as security agent for NIB in relation to any collateral securing the loans under this facility.
The target group of borrowers are SMEs with a turnover of up to EUR 50 million and small mid-caps with a turnover of up to EUR 150 million. Projects eligible for financing will be located in Finland and include investments in new machinery or equipment (tangible capital) or production/service units, IT and investments in research and development, including necessary working capital, according to NIB.
“The facility we are opening together with Garantia aims to support smaller businesses in Finland through a model that allows NIB to share the credit risk with a business partner. This is the first risk-sharing loan facility that the Bank has engaged in”, says Henrik Normann, NIB President & CEO.
“The purpose of this loan programme and partnership between NIB and Garantia is to bring to market a new financial alternative to support SME and mid-cap investments. Cooperation with NIB opens a new area for Garantia to expand its financial solutions to Finnish companies”, says Vesa Aho, CEO of Garantia Insurance.
The new cooperation model follows the adjustments in NIB’s lending strategy made last year in an effort to broaden the Bank’s range of products for SMEs and mid-caps.
Established in 1993, Garantia is a privately owned non-life insurance company that specialises in issuing guarantees for Finnish corporations. Garantia is a wholly-owned subsidiary of Taaleri Group.