Introduction to European Investment Fund Guarantee

This functionality allows banks to credit the small and medium enterprises (SMEs) by using the collateral management in respect of EIF (European Investment Fund) guarantees.

An EIF SME guarantee is a guarantee instrument based on the EU initiative, the SME Initiative, and is used to support small and medium enterprises – SMEs.

The EIF’s SME guarantee covers 50% of the loan balance. The guarantee is a secured collateral and its risk weight is zero in the banks’ capital solvency calculations.

An EIF EASI (European Commission's Programme for Employment and Social Innovation) guarantee covers 80% of the loan balance and, as the maximum loan amount permitted is EUR 25,000, the guarantee maximum amount is EUR 20,000. The EASI guarantee is also a guarantee instrument based on the EU initiative and is used to support micro-finance or social enterprises loans. It is a secured collateral and its risk weight is zero in the banks’ capital solvency calculations.

The following items are introduced as part of this functionality:

• The Eif Collateral Type field is added to the EUIFGT.PARAMETER application to store the Collateral Type of the EIFG guarantee type.
• New fields, Collateral Max Value, Loan Max Value, Eif Commission Description and Eif Customer Code, are added to the EUIFGT.PARAMETER application to parameterise the Maximum Collateral Value, Maximum Loan Value fields, text will be displayed in the arrangement overview screen for EIFG supported loans, and Customer Code of EIFG.
• The Guarantee Program local reference field is created in the collateral file and its value is stored in the EB.LOOKUP application.
• A new collateral type for the EIF guarantee is created, EIFGTEE. The Eifg Type local ref field is introduced in the COLLATERAL application with three options stored in the EB.LOOKUP application, namely:
  • SME initiative.
  • EASI micro-finance – MIK.
  • EASI social enterprises – SOS.
• A validation routine is added in the COLLATERAL application, when the Collateral Type field value is EIFG. The Eifg Type and Guarantee Program fields are mandatory.
• The EIFG Type and EIFG Program fields are added to the COLLATERAL,FI version.
• A new functionality is added to update the collateral’s nominal value based on the loan outstanding amount online, to calculate interest and commission for EIFG. The calculation of the commission happens only when there is an EIF guarantee attached to the loan.

Click here to understand the terms and abbreviations used in this module.