Two billion euros available for SME loans in new cabinet plan
Dutch pension funds, insurance companies and banks are to make investment of additional two billion euros into Dutch SMEs in the following three years, reports the cabinet. To make this possible, the Dutch Investment Institution (NLII) is establishing two separate investment funds. The Ministry of Economic Affairs (EZ) will support the private initiative and make certain guarantees available for the investors.
To facilitate investment into the SMEs, NLII is setting up a Subordinated Loans Fund (ALF), and the Business Loans Fund (BLF). ALF enables entrepreneurs with restricted equity to attract loans between 150,000 and 5 million euros. Through BLF, banks can provide loans of 10 to 25 million to entrepreneurs even if banks already own a large share in a company or an industry. Institutional investors are investing 800 million euros in those funds, and thus, through cooperation with banks, 2 billion of additional liquidity is available for SMEs.
“With the establishment of the two new funds, NLII is taking an important step to strengthen the Dutch economy structurally. Entrepreneurs can hereby attract the necessary funds to invest into new products and services”, the Minister of Economic Affairs Henk Kamp said. “That leads to jobs and economic growth”.
Without the funds of the NLII, it is less attractive for institutional investors to invest into the SMEs. The NLII creates a bridge between the players who invest on a large scale and the borrowing needs of the entrepreneurs.
The guarantee provided by the EZ for the ALF is a part of the complementary action plan for the SME financing. The government thus intends to attract additional liquidity through improved security of investment.