How Participative and Subordinate Loans, by ERDF, promote the growth of newly created or growing companies, prioritizing innovation
Participative loans: promote the growth of newly created companies, prioritizing innovation, through co-investment with other private investors in projects in the Valencia Region.
Subordinated loans: finance business projects of small and medium-sized companies.
The loans are managed directly by the IVF, with the financial intermediaries selected for this purpose, collaborators and co-investors, in the case of participative loans. In the case of subordinated loans, the Project requires additional financing from a third party.
IVF is the only partner of the instrument. Financial intermediaries participate in the deployment.
Final recipients targeted are business projects of innovative character for the commercialization of a product that includes significant improvements and / or that contemplates investments destined to the expansion and / or reinforcement of the general activities of a company or to the realization of new projects, the penetration in new markets or new activities.
Amount: between 25K€ and 300K@, and 200K€ and 2.000K€ per financed SME, , in a maximum term of 7 or 10 years, with a lack of capital amortization up to 3 years. The loan will accrue the interest rate established by the Euribor for twelve-month deposits, with a minimum value of 0.00%, plus a differential of 6.50%.
Resources needed
As a result of all this, the participation of the IVF in 12 venture capital entities with an investment commitment of approximately 25 million euros has been approved, and the participatory and subordinated loans with a total endowment of 76.8 million of euros have been launched.
Evidence of success
€76.88 million (€38.44 from ERDF and €38.44 from national and regional public co-financing) +at least 50% from private co-investors at project level, mobilizing a total amount of 125 million euros to address the identified market failure.
Potential for learning or transfer
The instruments are in a very early stage of their execution, being the prospects of use very positive due to the very favorable reception by the different agents of the Market both for the part of the demand for financing and for investors specialized in this type of projects.
In this initial phase of execution, 13 applications for participatory loans for a total amount of 3.2 million euros, and 6 requests for suborid loans for an amount of 5.4 million euros have been processed.
Tags: Funding, Innovation, Structural Funds
