Factsheets on ERDF financial instruments

Loan financial instruments offer efficient public support, especially when lending banks face liquidity issues. Loan financial instruments provide a flexible financing solution tailored by managing authorities to meet local sectoral needs and achieve public policy goals.

The financing gap remains high for SMEs, the energy efficiency sector and other priority sectors during the 2021-2027 period. Smaller and younger SMEs, innovative companies and those in new sectors like the circular economy, face significant difficulties accessing debt financing due to a lack of credit history and collateral.

Guarantee financial instruments, by providing loss protection to the banks in case of loan defaults, improve the banks' lending capacity and appetite for riskier projects. In case of default of a loan, the guarantee can significantly reduce the loss to be borne by the bodies providing the underlying loans (i.e. lending banks).

This factsheet presents the key features of equity financial instruments, together with industry best practice to support managing authorities and other fi-compass stakeholders looking to implement equity financial instruments in the future. Relevant fi-compass resources are highlighted throughout the factsheet for users to find additional, more in-depth information.

Equity finance can be key to creating sustainable high quality innovative businesses in emerging sectors including digital technology (such as green or climate tech), healthcare and biotechnology.