Risk-Sharing Finance Facility (RSFF) – Questions and answers

05 June 2007
by eub2 -- last modified 05 June 2007

On 5 June 2007, the European Commission and the European Investment Bank (EIB) signed a cooperation agreement establishing the new risk-sharing finance facility (RSFF) to support research & innovation in Europe. This new instrument is designed to help to make more financing available for promoters of research & innovation projects, which often face more difficulties than traditional business sectors in accessing finance, due to the relatively high levels of uncertainty & risk inherent to their activity. The RSFF, part of the EU's 7th Research Framework Programme (FP7) & EIB’s programme for Research & Innovation, will partially cover the financial risks assumed by the EIB when financing this type of activity. The contribution of EUR 1 billion each from FP7 & the EIB will therefore unlock billions of additional financing in this area.

WHAT?

RSFF is an innovative debt-based facility, designed by the European Commission and the EIB that will create an additional financing capacity of billions of Euros in support of Research, Technological Development and Demonstration projects as well as Innovation investments (RDI projects).

WHY?

Developing new sources of private sector RDI financing is one of the key elements of the new Lisbon Agenda cycle. RSFF will specially address this constraint by providing access to financing at acceptable terms for notably higher risk promoters or projects.

Today, investment in RDI is increasing in importance as a percentage of company budgets and is increasingly vital to many companies' long term survival. Therefore, whenever internally generated cash is scarce, there is a need for external financing to continue RDI.

HOW MUCH?

Both the EU, through a new tool of the 7th Framework Programme, and the EIB will contribute EUR 1 billion each to RSFF which will provide the necessary capital to underpin the expected loans and guarantees by the EIB of several billion euros.

HOW?

RSFF will increase the EIB's capacity to finance more R&D and innovation projects, and thus enable it to provide loans and guarantees with higher risk profiles than those readily financed on the European market. By reinforcing the financing capacity of the EIB in the area of research and innovation, RSFF will facilitate and leverage the efforts of a large number of European financial institutions in RDI financing, thus increasing banking and capital markets financing in that sector.

RSFF is demand driven. The EU and the EIB will be reimbursed for the risks taken.

FOR WHOM?

RSFF will benefit private and public organisations involved in research and innovation of any size and ownership, and in particular research intensive mid-size companies, SMEs as well as research infrastructures and other large research undertakings like Joint Technology Initiatives (JTIs).

RSFF is not only opened to legal entities involved in FP7 or EUREKA projects, but to all legal entities and projects carrying out RDI activities that contribute to FP7 objectives.

The EIB will make available risk sharing credit facilities to its network of partner banks in all Member States and Associated Countries, as requested by the Council and the European Parliament for smaller projects and promoters. Such facilities will increase the bank's lending capacity in support of eligible RDI projects.

HOW TO ACCESS?

Promoters of research projects seeking loan financing can already contact the EIB services via its Head Office in Luxembourg (email RDI@eib.org) or via the external offices in Austria, Belgium, France, Germany, Greece, Italy, Poland, Portugal, Spain and the UK. Contacts for relevant intermediary banks will be published on EIB’s web site.

Risk Sharing Finance Facility - European Investment Bank - further information

Source: European Commission