The European Commission and the European Investment Fund (EIF) have announced a €121 million guarantee initiative to support SMEs in the cultural and creative sectors via financial institutions. This scheme is expected to create more than €600 million worth of bank loans over the next six years.
The initiative allows the EIF to provide guarantees and counter-guarantees, free of charge, to selected financial intermediaries in order to enable them to provide more debt finance to entrepreneurs in the cultural and creative arena.
Guarantee institutions, commercial and promotional banks as well as other financial intermediaries benefiting from the €121 million guarantee will support more than ten thousand SMEs in a wide range of sectors such as audiovisual (including film, television, animation, video games and multimedia), festivals, music, literature, architecture, archives, libraries and museums, artistic crafts, cultural heritage, design, performing arts, publishing, radio and visual arts.
The financial instrument, set-up under Creative Europe– the main EU programme dedicated to the cultural and creative sectors, will be managed by the EIF on behalf of the European Commission. European SMEs should benefit from it as early as of the end of this year.
The creative and cultural sectors represent more than 7 million jobs in the EU and account for 4.2% of the EU's GDP (source). Access to finance can be difficult for these sectors, primarily due to the intangible nature of their assets and collateral, the limited size of the market, demand uncertainty, and lack of financial intermediary expertise in addressing sector specificities.
The new Cultural and Creative Sectors Guarantee Facility includes capacity building activities for financial intermediaries, giving them specific expertise on key elements of these sectors (e.g. specific business models and credit risk assessment in the sectors). Capacity building would be provided by (a) capacity building provider(s) selected by the EIF (e.g. a consultancy company specialised in the way the cultural and creative sectors work) following an open call for tenders. Such training will be free of charge for financial intermediaries.