The size of two EU loan guarantee programmes was set without a comprehensive analysis of market needs, and too many of the companies which benefitted were not in real need of a guaranteed loan, according to a new report from the European Court of Auditors. Nevertheless, companies that received a guaranteed loan did grow. A significant share of companies that received an innovation-related guaranteed loan displayed only a modest degree of innovation, say the auditors. This is not in line with the focus and ambition for excellence stated in the regulation. The auditors also note that the European Commission has not yet provided sufficient evidence of the impact of the loan guarantees and of their cost-effectiveness. While the Commission has overall responsibility for the programmes, the implementation is entrusted to the European Investment Fund (EIF).
The auditors analysed whether EU loan guarantees supported smaller businesses’ growth and innovation by enabling them to access finance. They examined the two centrally managed instruments currently in operation: the InnovFin SME Guarantee Facility for research- and innovation-driven companies and the Loan Guarantee Facility. Over the 2014-2020 period, the EU budget is expected to provide €1.78 billion to cover both potential losses on loans and the costs of running the instruments. This figure rises to €3.13 billion when top-up funding from EFSI, the European Fund for Strategic Investments, is included. In terms of financial volume, the two instruments are relatively modest compared with those provided by the EU for national SME guarantee schemes under the Structural Funds and those provided by Member States themselves.
“Our auditors found that there is a need to better target viable businesses lacking access to finance, and those that conduct research and innovation with a high potential for excellence,” said Neven Mates, the Member of the European Court of Auditors responsible for the report. “The schemes also need to be coordinated with similar schemes at national level”.