EIB President Philippe Maystadt said loans would be given to banks, which would then pass credit on to small businesses. He said SMEs have been hardest hit by the current downturn and jobs are in jeopardy due to the lack of credit available from banks.
Speaking at a meeting on microcredit schemes, organised by the European Parliament's committee on economic and monetary affairs, Maystadt said the EIB had been asked by member states to prioritise SMEs, and this prompted the bank to devise new lending products.
"The bank already lends between €5 billion and €6 billion to banks for SMEs each year, and has now committed to lending €30 billion between 2008 and 2011. In 2008, €8.5 billion was given to banks across the EU, €5 billion of which was spent in the last quarter of the year as a response to the enfolding economic crisis," he said.
However, an initial attempt to establish a European Microfinance Fund had not attracted sufficient funds from member states due to "a lack of solidarity" and governments' insistence on attaching strict conditions to money they lend, he added.
Maystadt insisted the new scheme is not aimed at increasing the liquidity of banks, but would encourage financial institutions to loosen the supply of much-needed credit to SMEs.
To mitigate the risks taken by banks in lending to businesses, the EIB will take on half of the risk, thus reducing the capital requirements of lending institutions.
He told the seminar, which was attended by MEPs and national parliamentarians from across Europe, that banks can also use the funds for "intangible" investments in research, distribution and patents.
In addition, the EIB would make technical assistance available to microcredit institutions to help them become more professional and make larger banks less hesitant to lend.
"None of this forces banks to lend to SMEs. We try to make clear to banking partners that only those who make quick use of funds will be supported in future because our aim is to make credit available quickly," he concluded.
