The European Investment Bank (EIB) is tackling the issue of restricted access to business finance in Hungary with a €400m loan to Magyar Export-Import Bank (Eximbank).
The funds will be lent on favourable terms by Eximbank and its partner banks to small and medium-sized enterprises (SMEs) and midcaps in Hungary.
In a recent EIB Survey on investment and investment finance, the EIB observed that 13% of firms in Hungary consider themselves to be finance-constrained, which is higher than the EU average of 5%.
Overall, firms in Hungary want more of the type of external finance they are already using, such as bank loans.
EIB vice-president Vazil Hudák, responsible for the Bank’s activities in Hungary, said: “SMEs and midcaps are important drivers of growth, employment and innovation in Europe.
“They account for well over 90% of businesses in the EU and employ two-thirds of the active working population.
“Supporting access to finance for SMEs and midcaps is a top priority for the EIB Group. We are therefore glad to partner again with Eximbank, as together we will contribute to regional development and boost the competitiveness and productivity of small businesses in Hungary.”
The EIB loan provides medium- and long-term funding. Additionally, the financial advantage provided by the EIB will enable small businesses in Hungary to receive investment loans on favourable terms.
Eximbank CEO Zoltán Urbán said: “Eximbank is delighted to continue its successful co-operation with the EIB as we share similar development goals with a particular focus on supporting job creation among Hungarian SMEs and midcaps.
"As a result of recent co-operation we were able to finance 362 different SMEs and midcap companies that employ around 62,000 people. In line with our new 2017-2021 business strategy, I expect to further strengthen our footprint in the SME and midcaps sector.
"Therefore, the loan agreement signed today with the EIB will create a significant funding basis for financing SMEs and midcaps in the coming years.”
The EIB first provided its support to the Hungarian economy in 1990 and since then it has lent almost €20bn.
Last year, EIB investment in Hungary amounted to almost €700m and more than 40% of its lending went to small businesses.