The European Investment Fund (EIF) said it has finalised agreements with eight leading banks and financial institutions in Finland to assist small and medium-sized enterprises (SMEs), small mid-caps and housing companies.

The EIF is part of the European Investment Bank (EIB) Group.

“The agreements will facilitate around €1 billion in lending to invest in projects that promote Finland’s climate objectives and environmental sustainability,” said the EIF.

“The guarantees will enable partner banks to offer better financing terms, such as lower interest rates.

“Additionally, thanks to the EIF guarantees in place, banks can provide longer maturities with lower collateral requirements, among other things.

“The agreement will therefore benefit startups that could have otherwise faced obstacles in securing financing for their investments, and help housing associations to finance necessary energy efficiency renovations.

“The guarantee may cover up to 70-80% of each loan’s amount.”

The EIF said it has concluded agreements with Aktia, Danske Bank, Finnvera, Nordea Bank, Oma Savings Bank, OP Cooperative, POP Bank and Ålandsbanken.

Finland’s Minister of Climate and the Environment Kai Mykkänen said: “The new source of financing totalling one billion euros is a most welcome addition to the market.

“The sustainability guarantee loan will encourage SMEs and housing companies to also invest in energy efficiency of buildings and clean energy.

“I hope that the loan guarantee will boost investments in the real estate and construction sector now that the difficult economic situation has slowed down new construction and renovation and the Energy Performance of Buildings Directive brings new requirements.”

EIF CEO Marjut Falkstedt said: “We’re delighted to be collaborating closely with the Finnish government and the European Commission to ensure that Finnish businesses receive the financial support they need to navigate the green transition.

“These agreements will translate into greater access to finance, empowering small businesses to pursue their growth ambitions and at the same time contribute to a greener future.”

The sustainability guarantees are backed by the European Commission’s InvestEU programme, which aims to trigger more than €372 billion in additional investment between 2021 and 2027 for EU policy priorities, including the green and digital transitions.

On top of the initial contribution to the InvestEU guarantee, the government of Finland has allocated an additional €100 million to the loan programme in Finland to increase the scale and impact of the guarantees.

In Finland, the loan guarantee programme is administered by the Ministry of Economic Affairs and Employment and the Ministry of the Environment.