EIB’S

Loans for SMEs and/or MidCaps

MULTIPLE BENEFICIARY INTERMEDIATED LOANS (MBIL)

Warsaw, 6 November 2014

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Main EIB Financing Facilities

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•European Investment Bank Group •2

Direct Loans Intermediated Loans (SMEs)

Large-scale investments

(min. EUR 25m, ideally above

EUR 70-80m)

• Small and medium-scale projects

(particularly to SMEs) via local

intermediary banks

• Lending decision remains with the

financial intermediary

Company Bank/

Leasing Company

EIB

Investment Improved loan

Company

Investment

EIB

3

EIB intermediated lending: Loans for SMEs (and/or Mid-Caps)

Partner bank

or leasing company Investment and (revolving)

working capital loans & leasing

SME/MidCap

Beneficiary

SME/MidCap

Beneficiary

SME/MidCap

Beneficiary

SME/MidCap

Beneficiary

SME/MidCap

Beneficiary

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Transparency

•Final beneficiaries are informed of EIB involvement

Transfer of Financial Advantage

•Financial intermediaries benefit from financial value added and transfer an agreed share to the SME and/or MidCap final beneficiary, as interest rate reduction and longer loan tenor

Complementarity

•EIB leverage effect

•Financial intermediaries commit to provide SME/MidCap loans of at least 2 times EIB loan amount

Main features

…

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EUR 18.5bn of new financing

in the EU (and Candidates)

Comprehensive country coverage

EIB support for SMEs and Mid-Caps in 2013

.

* Other Member States and Candidate and Potential Candidate Countries:

Austria, Bulgaria, Cyprus, Croatia, Denmark, Estonia, Finland, Hungary, Ireland, Lithuania, Latvia, Luxembourg, Malta, Netherlands,

Romania, Sweden, Slovenia, Slovakia, United Kingdom, Albania, Bosnia and Herzegovina, FYROM, Kosovo, Montenegro, Norway,

Serbia.

*

EIB support for SMEs and Mid-Caps in Poland (2009 - Sept 2014 )

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• EIB lowers financing costs

• EIB increases availability of financing

• EIB extends loan tenors

• Facilitates ALM with funding in PLN and foreign currencies at

tenors above what is readily available.

• …EIB financing is used by an increasing number of banks and

leasing companies

Advantages of EIB financing for Banks and Leasing institutions

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An increasing number of Banks and Leasing institutions

are offering the EIB Loan for SMEs and Mid-caps

.

*

An increasing number of SMEs and Mid-Caps benefit from EIB support

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• Attractive to SMEs as part of the EIB financial advantage is

passed on to SMEs

• EIB product provides an additional product for Banks lending and

leasing to SMEs

• EIB L4SMEs is easy to implement and wanted by many financial

institutions in Poland

• …L4SMEs can be combined with InnovFin SME guarantees

(EIF) or Mid-caps guarantees (EIB) to increase impact and

financial advantage

Advantages of EIB financing

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InnovFin – EU finance for innovators with EC support

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Senior risk sharing with financial intermediaries for innovative MidCaps

Eligibility criteria include “fast-growing enterprise”

50% guarantee rate covering losses (principal and interest) incurred on each

new loan; Guarantee payment upon default, with pro-rata sharing of recoveries

Guarantee pricing based on revenue sharing with financial intermediaries

InnovFin

MidCap

Guarantee

Direct loan, quasi-equity & mezzanine financing to innovative MidCaps

Amounts between EUR 7.5m – 25m (max 50% project cost)

Successful pilot programme in 2013

Streamlined EIB application & approval process

InnovFin

MidCap

Growth

Finance

Alternative to EIB funding =

Combined EIB/EIF support for SME-based securitisation

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Support relaunch of the European SME-based ABS

market:

EIB purchases of ABS as

substitute for Loan for SMEs

Joint EIB-EIF SME ABS Initiative : EIB investment in

senior tranches with EIF guarantees for third party

investors in senior tranches

EIB Group Risk Enhancement Mandate: EIF ABS Credit

Enhancement for mezzanine guarantees and capital relief

Contacts at EIB

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Jelena Emde Lending Operations in Poland

Phone: (+352) 4379 86567 j.emde@eib.org•www.eib.org

Mikko Helkala Lending Operations in Poland

Phone: (+352) 4379 89661 m.helkala@eib.org• www.eib.org

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ANNEXES (Back-up slides)

• The Intermediary commits to inform each Final Beneficiary of the EIB support, either through:

• Mentioning EIB in the Finance contract: EIB’s involvement must be mentioned in an appropriate way in the finance contracts with the Final Beneficiaries.

• Letter or e-mail, sent to each Final Beneficiary indicating that the financing has benefited from EIB support, and state the difference in terms and conditions stemming from this support.

• Product labelling – name of the product should clearly refer to partnership with EIB.

• Website dedicated information page describing partnership with EIB - include eligibility criteria and a reference to the advantageous conditions of EIB.

• EIB reserves the right to ask the Intermediary for documentary evidence that the information about EIB support and about the amount of financial advantage transferred has indeed been conveyed individually to the relevant Final Beneficiaries. The Intermediary should retain this evidence at least until the EIB Loan has been reimbursed.

TRANSPARENCY: Information to Final Beneficiaries

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ANNEX 1 . Main features of EIB LOAN 4 SMEs

• The Intermediary commits to inform each Final Beneficiary of the EIB support, either through:

• Interest rate rebate ->

• Upfront cash back of NPV ->

• Others (longer maturities…) ->

• Continuous random check of a sample out of each allocation list selected

TRANSFER OF FINANCIAL ADVANTAGE

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At the end of the Allocation Period , the Intermediary SME/Mid-Cap loending should be at least 2 times EIB loan amount

either yearly check or at the end of the Allocation

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ANNEX 2. ALLOCATION REPORTING FOR EIB Loan for SME’s + Small scale MIDCAP projects + Global Loans

Multi-sector MBIL

ANNEX 3. Eligibility EIB Loan for SME’s

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* In convergence regions, it is allowed to finance non autonomous SME (less than 250 employees but not respecting the rules from (ii) to (iv) ) with a limit of up to 1/3 of the EIB credit line

ANNEX 4. MidCap Loan for small scale projects

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ANNEX 5 - Public Sector Entities

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Final Beneficiary =

Public Sector Entities

(1) State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or

several of such bodies governed by public law

(2) defined in a broad sense, including regions, counties or districts, municipalities, their associations and their public-private partnerships

(3) eligible as long as their Sub-projects target one or several of the EIB's Priority Objectives

Location of the Project EU Member States

Total cost of the Project between EUR 40 000 and EUR 25m

Term of the sub-financing Min 60 months (5 years)

EIB financing

(i) in general up to 50% of the project cost but up to 100% in case of damage recovery following natural disaster

(ii) (2) EIB + potential EU subsidies shall not exceed 90% of the project cost

Investment categories,

max implementation of 5 years

(i) new Sub-Projects in terms of location, design and benefits, and may also involve expansion or modernisation. Mere repair or

maintenance activities cannot be considered

(ii) economically, technically and financially sound;

(iii) purchase of tangible assets, land or intangible assets (e.g. development, planning and financing costs during the construction phase)

which are directly associated with the Sub-Project.

(iv) permanent increase in working capital required to expand business activity as a result of the Sub-Project

(v) (1) investments in used fixed asset are allowed in case their acquisition cost is less than 50% of the total project cost

(v) (2) used building should be individually assessed if older than 10 years, equipment should not be older than 10 years; the used asset

should be essential for the new investment, create new jobs, theirs cost should correspond to their market value; particular limitation of the

% used asset in the total project

(vi) for energy project - specific conditions apply

Information to FB (i) about EIB involvement

(ii) about the financial advantage transferred (on a best effort basis)

Information on FI website the FI should be ready to insert in their website an information on EIB's activity

ANNEX 6 - Private Sector Entities (non-SME, non-MidCap)

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Final Beneficiary

Private sector enterprise with > 3000 employees

eligible as long as their Sub-projects target one or several of the EIB's Priority Objectives

Location of the Project EU Member States

Total cost of the Project between EUR 40 000 and EUR 25m

Term of the sub-financing

min 48 months (4 years)

EIB financing

in general up to 50% of the project cost but up to 100% in case of damage recovery following natural disaster

EIB + potential EU subsidies shall not exceed 70% of the project cost (90% in convergence regions)

Investment categories,

max implementation of 5 years

(i) new Sub-Projects in terms of location, design and benefits, and may also involve expansion or modernisation. Mere repair or

maintenance activities cannot be considered

(ii) economically, technically and financially sound;

(iii) purchase of tangible assets, land or intangible assets (e.g. development, planning and financing costs during the construction phase)

which are directly associated with the Sub-Project.

(iv) permanent increase in working capital required to expand business activity as a result of the Sub-Project

(v) (1) investments in used fixed asset are allowed in case their acquisition cost is less than 50% of the total project cost

(v) (2) used building should be individually assessed if older than 10 years, equipment should not be older than 10 years; the used asset

should be essential for the new investment, create new jobs, theirs cost should correspond to their market value; particular limitation of the

% used asset in the total project

(vi) for energy project - specific conditions apply

Information to FB (i) about EIB involvement

(ii) about the financial advantage transferred (on a best effort basis)

Information on FI website the FI should be ready to insert in their website an information on EIB's activity

ANNEX 7. MidCap Loan for large scale projects

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ANNEX 8. MidCap Loan for large scale projects

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European Investment Bank Funding for SME Loans

Through an agreement with the European Investment Bank (EIB; www.eib.org) we are supporting small and medium sized businesses (SMEs and MidCaps)

by providing access to an invaluable source of lower cost finance and flexible repayment schedules.

A European Cooperation for the benefit of SMEs

The EIB is the long-term lending bank of the European Union; its task is to contribute towards the integration, balanced development and economic and social

cohesion of the EU Member States. Thanks to its best possible rating on the capital markets (AAA), the EIB can borrow funds on favourable terms, which it

passes on to SMEs and MidCaps through us. Extensive information related to the EIB Group support to SMEs and MidCaps can be found in the EIB website

(www.eib.org).

Who can apply for an EIB loan?

Independent SMEs with less than 250 employees;

Independent MidCaps with less than 3 000 employees;

all economic sectors are eligible with few exceptions, amongst which production of weapons and ammunition, arms, military or police equipment or

infrastructures, and equipment or infrastructure limiting people’s individual rights and freedom, gambling, tobacco related industries, ethically or morally

controversial sectors such as human cloning and pure property speculation.

What can an EIB loan be used for?

The EIB loan can be used to finance all investments and expenditures that are incurred in the development of an SME or a MidCap i.e.:

Tangible investments: purchases of plant and equipment, with some exceptions concerning land purchases.

Intangible investments: particularly the expenditure involved in R&D, building up or taking over distribution networks, taking out or buying patents, buying out a

company in order to safeguard economic activity (for a buy-out cost of nor more than EUR 1 million).

Medium and long-term working capital requirements

What are the benefits for your Business?

You can receive lower interest rates compared to standard business lending rates.

You can negotiate the term or repayment frequency of the loan to suit the circumstances and cash-flow requirements of your business.

It allows you to invest significantly in your business without adversely affecting your cash-flow or liquidity.

You shall agree that (a) upon reasonable notice you will permit representatives of the EIB to inspect all sites, installations and works that comprise the project

which is the subject of the loan; and (b) following a request by the EIB, we may give any information about you to the EIB.

Please contact our (Relationship Manager) or visit our (local branch) to discuss if your business qualifies for funding supported by the EIB "Loans for SMEs" or

EIB "Loan for MidCaps" scheme.

Information on FI’s website example

• Production of weapons and ammunition, arms, military or police equipment

• Gambling, betting and related equipment;

• Tobacco manufacturing, processing, or distribution;

• Activities involving live animals for experimental and scientific purposes

• Sectors considered ethically or morally controversial or which are forbidden by national law, e.g. research on human cloning;

• Pure real estate development activity;

• Pure financial activities;

• Land purchase unless it is technically absolutely essential for the investments. Financing of purchase of farmland is entirely excluded.

• Financing of recoverable Value Added Tax (“VAT”) is expressly excluded

• Pure refinancing of existing loans and old projects

• Consumer loans

ABOVE LIST PROVIDES GENERAL FRAMEWORK OF EXCLUDED ACTIVITIES.

THIS LIST IS COMPLEMENTED BY THE DETAILED LIST OF ELIGIBLE AND EXCLUDED SECTORS (SO-CALLED « NACE CODE LIST »)

Excluded sectors

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Mid-Cap Guarantees - Structure & Key Terms

• MCG provides an unfunded guarantee to the selected Financial Intermediary (FI) on new

loans to be generated

– 50% guarantee rate covering losses (principal and interest) incurred on each new loan

– Guarantee payment upon default, with pro-rata sharing of recoveries

• MCG is expected to provide capital relief on the guaranteed exposure

• Alignment of Interest: no risk-hedging possible on the non-guaranteed share of each loan

• Portfolio of new loans to be built-up within a 2-year period

– Delegated model: FI includes loans based on eligibility criteria (through quarterly reporting)

and remains in charge of the loans monitoring and work-out actions

– Maximum EUR 400 million non granular portfolio, with approximately 20-30 loans (expected)

– Minimum portfolio quality (to be defined following the due diligence)

• MCI guarantee priced on market terms

– 50/50 sharing with EIB of FI’s margin over cost of funds (net of administration costs)

– 50/50 sharing with EIB of FI’s up-front, waiver and restructuring fees (only above a defined

cap)

– Guarantee Fee to be reviewed in details at EIB’s Due Diligence in order to ensure alignment

of interest

Mid-Cap Guarantees – Eligibility Criteria

• Eligible Beneficiaries

– Mid-caps and large SME companies: less than 3,000 employees (at group level)

– Operating in EU-28 and other H2020 eligible countries (Norway, Turkey…)

– Minimum rating requirement, expected at an equivalent Ba3-B1 (to be reviewed during the due diligence)

– Innovative companies

• Eligible project costs

– Eligible beneficiaries must have a “project” budgeted over 3-years

– Larger projects to be pre-approved by the EIB under a simple form approach

• Loan characteristics

– Loan amount: minimum EUR 7.5 million (or EUR 1 million possible for Mid-caps with more than 500 FTEs)

and maximum EUR 50 million

– Loan maturity: minimum 2 years, maximum 7 years

– Fixed repayment schedule (no revolving loan), with a capped grace period (no bullet loans)

Mid-Cap Guarantees – Innovation Criteria

• The Mid-cap is a “fast-growing enterprise” if it has a

– growth in turnover of at least 10% (average p.a.) over a three-year period, or

– growth in FTEs of at least 5% over a three-year period (average p.a.) and with one hundred or more

employees at the beginning of the observation period

• The Mid-cap has a significant innovation potential if it has

– R&I expenses/investment (in the latest financial statement) at least equal to 5% of its annual turnover

– 80% of the Mid-cap loan invested in R&I expenses/investments in the next 36 months (as indicated in its

business plan and reflected in future financial statements)

– Been formally awarded grants, loans or guarantees from European R&I support schemes and/ or through

their funding instruments or regional, national research or innovation support schemes over the last 36

months

– Been awarded an innovation prize over the last 24 months

– Has registered at least one patent in the last 24 months

– Has received an investment from a venture-capital fund (life science/clean energy/technology) or the venture

capital fund is a shareholder of the Mid-cap (at the time of its application for the Mid-cap Transaction)

– Has its registered seat in a science, technology, or innovation park or technology cluster or technology

incubator, in each case with activities relating to R&I

– Has benefited from tax credit or tax exemption related to investment in R&I in the last 24 months.

• At least one (out of the ten) criteria above must be met !