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Glossary

Find an explanation of most used terms in relation to financial instruments

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Title Term Definition
Leverage effect

“The Union contribution to a financial instrument shall aim at mobilising a global investment exceeding the size of the Union contribution according to the indicators defined in advance”.

Article 223 – The leverage effect of Union funds shall be equal to the amount of finance to eligible final recipients divided by the amount of the Union contribution.

In the ESIF context, the leverage is the sum of the amount of ESIF funding and of the additional public and private resources raised divided by the nominal amount of the ESI Funds contribution.
Loan

An agreement which obliges the lender to make available to the borrower an agreed sum of money for an agreed period of time and under which the borrower is obliged to repay that amount within the agreed time.
Loan default

A situation where a loan is not paid back by the borrower, the final recipient, which triggers the use of the guarantee to cover the losses of the lender.