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European Union backs Byggðastofnun to support small businesses in Iceland

  •  
    Date: 29 October 2020
  • The European Investment Fund signs a guarantee agreement with Byggðastofnun in support of ISK 3.26 billion of financing to small businesses in rural areas of Iceland.
  • The guarantee, backed by the EU’s “COSME” programme, will allow Byggðastofnun to increase its lending to an underserved sector in the Icelandic economy.
  • Byggðastofnun will make available new lending possibilities with a special focus on green loans, innovation, female entrepreneurs, young farmers, and loans to fisheries in fragile communities.

The European Investment Fund, with the backing of the EU’s COSME programme, is extending a guarantee to a portfolio of up to ISK 3.26 billion (€20 million) worth of loans to Icelandic financial intermediary Byggðastofnun, to allow them to increase their lending to small and medium sized entrepreneurs in the Icelandic countryside. The guarantee allows Byggðastofnun to go beyond its credit policy and launch new products aimed to support SME clients currently underserved by the market, offering them new loans with more advantageous conditions.

With this European support, the independent Icelandic state agency will offer loans with improved terms to SMEs, including dedicated lines for female entrepreneurs, innovators, green loans (defined in line with the guidelines of the Icelandic Environmental Agency), loans to young farmers, and loans to fisheries in fragile communities around the Icelandic countryside. It is expected that around 100 Icelandic entrepreneurs will be able to benefit from this new financing programme.

Byggðastofnun focuses its activities on the entire island of Iceland, except for the capital and the municipalities around Reykjavík and has a specific policy goal of supporting SMEs in rural areas. By supporting what is often the only economic activity in a given settlement, this support enables the survival and the development of small villages and communities in Icelandic remote areas by enabling the diversification of sources of employment and income.

Arnar Már Elíasson, Deputy CEO at Byggðastofnun, commented on the signature by stating: “It is vital, especially in the aftermath of this global pandemic, that rural areas will have access to funds for the inevitable rebuild and restructuring needed.  This agreement will enable Byggðastofnun to fulfil its purpose to strengthen and assist all rural communities.

EIF Chief Executive Alain Godard, added: “The EIF is glad to be extending its support to SMEs in Iceland, one of Europe’s closest partners. As a result of the guarantee, Byggðastofnun will be able to increase lending to SMEs outside of the capital region, safeguarding small communities. Against the backdrop of the current crisis, it important that we work with our partners to unlock support for entrepreneurs in rural areas and other underserved areas of the market.”

EU Ambassador to Iceland Lucie Samcová - Hall Allen commented: "Iceland and the European Union are very close partners. I am pleased that through the EU’s Investment Fund we can give a boost to approximately 100 small Icelandic businesses in rural areas – including to fisheries in fragile communities, to young farmers, to innovators and female entrepreneurs. This kind of cooperation has lasting results, with concrete benefits in the years to come.”

 

Background information:

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. Since its first project in Norway, in 1974, the EIB Group has made available over €6 billion to support projects in the EFTA region, about €5 billion through the EIB and €1,1 billion through the EIF. On the whole, in Iceland alone the EIB Group has made available nearly €1.2 billion euros throughout the years between EIB and EIF financing.

COSME is the EU programme for the Competitiveness of Enterprises and SMEs, running from 2014 to 2020, with a budget of €2.3billion. COSME will support SMEs by facilitating access to finance, supporting internationalisation and access to markets, creating an environment favourable to competitiveness, and encouraging an entrepreneurial culture.

Byggðastofnun is an independent investment agency owned by the Icelandic state. Byggðastofnun prepares, organizes and funds projects and provides loans with the aim of bolstering regional settlement, boosting employment and encouraging innovation in business and industry.

 

Press contact:

EIB Group: Tim Smit, +352 691 286 423, t.smit@eib.org

Byggðastofnun: Arnar Már Elíasson, +354 455 5400, arnar@byggdastofnun.is

European Commission: Flora Matthaes, +32 460 755148, flora.matthaes@ec.europa.eu

EU Embassy to Iceland: Klemens Þrastarson, +354 694 4205, klemens.thrastarson@eeas.europa.eu

 

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