SME support through EFSI is successful in the Czech Republic

The European Investment Bank has been entrusted with managing the financial flows within the Investment Plan for Europe of which the European Investment Fund (EFSI) is the main instrument. The EIB lends and provides guarantees for the financing of infrastructure, energy, environment, innovation and SME support projects. Investment support for SMEs is facilitated through loans (through EIB guarantees) provided by domestic banks. In the Czech Republic, the SME support has been successful in the last two years.

On the contrary, the project in the area of local infrastructure or a large loan to the business sector – with the financial support of EFSI – is not yet available in the Czech Republic. The European Commission Representation in the Czech Republic together with CEBRE organized a seminar on financing the investment by the EIB in October. Czech-Moravian Guarantee and Development Bank, a.s. (ČMZRB) already provides loans, guarantees and capital inputs supported by the state and the EFSI. Financial instruments are undoubtedly more effective than one-off non-repayable subsidies. They have more leverage, are less of a burden on public budgets in the long run, and eliminate inefficient projects.

Compared to subsidies, there is less risk of distortion of the market environment and misuse of public funds. In the new EU programming period after 2020, their share of funding is likely to increase at the expense of traditional subsidies. In the Czech Republic, entrepreneurs can use the GUARANTEE 2015-2023 program, providing the portfolio guarantee to small businesses, or an individual guarantee for social entrepreneurs. Guarantees are provided through banks in the Czech Republic and commercial banks have long-term experience with European Investment Bank funding, including EFSI. The advantage of EIB guarantees is the possibility of financing projects, even with a higher than usual risk. Compared to structural and investment funds, the conditions of advantageous loans are less administratively demanding and the approval is done very quickly within the normal credit process. Under certain conditions, credit products supported by the EFSI can be combined with EU funds.