InvestEU: EIF signs agreement with Erste Group using EU guarantee to unlock finance for social enterprises

Backed by the Social Investment and Skills window of the InvestEU programme, the European Investment Fund (EIF) has signed a guarantee agreement for €53 million with Erste Group that is expected to unlock more than €66 million for social entrepreneurs operating in Austria, the Czech Republic, Hungary, Romania and Slovakia. The transaction should benefit more than 500 social enterprises, which often have trouble obtaining credit, and create around 1 750 jobs.

The agreement will allow Erste Group to offer better financing conditions for social enterprises. These firms will also benefit from specialised capacity building and networking opportunities. All these initiatives aim to empower social enterprises and strengthen their impact.

Thanks to its social banking programme, Erste Group has established itself as a leader in financing social enterprises in Central and Eastern European (CEE) countries. More than 1 000 social enterprises have obtained loans through the programme, preserving or creating 16 242 jobs between 2016 and 2021. Erste Group also participated in the EU Employment and Social Innovation (EaSI) programme, a financing instrument promoting high quality and sustainable employment that ran from 2014 to 2021.

The new agreement under InvestEU will enable Erste Group to build on this success. Thanks to the participation of four Austrian savings banks in the guarantee programme, Erste Group will be able to promote social enterprise support in east Austria for firms not caught by the previous umbrella transaction under the EaSI programme. The transaction is also expected to have a strong positive impact on the social economy in the CEE region, which is not yet equally developed and stands to benefit greatly from a targeted instrument. To this end, Erste Group can count on the participation of all its subsidiary banks in the region.

Nicolas Schmit, European Commissioner for Jobs and Social Rights, explained, "InvestEU plays an important role in stimulating investments in the social economy. Thanks to this agreement, many social enterprises will get the financial and non-financial support they need to grow, create new employment opportunities, and develop new solutions for the societal challenges we face."

EIF Chief Executive Marjut Falkstedt added, "Social enterprises often face challenges in obtaining finance to start up and develop their activities. Yet they are a key driver for economic development and employment. With the financing made available thanks to the InvestEU programme and through our partnership with Erste Group and the participating banks, we expect to boost both economic and social growth in Austria and the CEE region."

Rainer Hauser, Head of Group Strategy at Erste Group, stated, "Rooted in its founding as a savings bank in the early nineteenth century, Erste Group, along with its subsidiaries, has always been devoted to the idea of inclusive growth and social responsibility. Social organisations are tackling some of the most pressing issues in our societies. By doing so, they serve as important multipliers for disseminating financial health across our region. With the help of instruments such as InvestEU, we can reach more social organisations and support them by offering financing and capacity building. This is something that we at Erste take very seriously."