The Entrepreneurship and Innovation Foundation (EIS) has launched a new market-based loan guarantee that helps companies obtain the necessary financing even when the previous state aid rules did not allow for the use of a traditional guarantee. The new solution gives entrepreneurs more opportunities to invest and grow.

EIS’s new market-based loan guarantee is intended for companies that need additional collateral to obtain a bank loan, lease, overdraft or bank guarantee. Until now, many companies could have been left without financing because state aid rules restricted the use of EIS’s traditional guarantee. Now EIS can also offer a guarantee on market terms, which allows it to support larger and more complex financing projects.

The size of the guarantee can reach up to 25 million euros and it can cover up to 80% of the guaranteed obligation. Slightly different conditions apply in the construction sector. The guarantee is suitable for investment and working capital loans as well as for leases, overdrafts and bank guarantees. The service is intended for creditworthy companies that have sufficient equity and no outstanding tax or loan arrears.

According to Minister of Economic Affairs and Industry Erkki Keldo, the new solution will help companies implement investments faster. According to him, a strong business idea, viable target markets and a clear growth plan should not be limited to the lack of additional guarantees. EIS board member Ivar Pae has said that the new service is the next step in EIS's goal to move from a distributor of subsidies to a financier of business development. In his opinion, a loan guarantee on market terms gives entrepreneurs a more flexible opportunity to finance growth and investment projects in a situation where a conventional guarantee can no longer be used.

In addition to the new service, the terms and conditions of EIS's existing loan guarantee also changed from June 1. The aim of the changes is to make the calculation of the guarantee simpler and more uniform for banks and to speed up the decision-making process. This should make applying for financing smoother for entrepreneurs.

A loan guarantee does not mean that a company applies for money directly from EIS. The entrepreneur first turns to a bank or leasing company, which evaluates the financing project and, if necessary, submits a guarantee application to the EIS. The guarantee is particularly helpful in situations where the company does not have sufficient collateral or has been operating for a relatively short time.

With the new service, the EIS wants to improve companies' access to financing and support investments that help increase the competitiveness of companies both in Estonia and in foreign markets. This is especially important for companies whose development plans have so far been behind financing restrictions, although the project itself has been economically justified.