The EIR (European Investment Fund) is a fund supported by the European Commission, aimed at financing small and medium-sized enterprises (SMEs) operating in Europe. Its primary purpose is to replace and complement funding programs like Horizon2020. High-risk innovation financing is seen as a key priority in the EU, and this loan financing offers a reasonably priced debt-based instrument for the market.The EIR loan (also known as the ESIR loan, ESIR financing, or EIR financing) includes several different programs (over 30), with loan sizes ranging from €100,000 to direct loans of up to €100 million. For Finnish early-stage and growth companies, typical loan amounts range from €300,000 to €1 million. Loans over €7 million are directly applied for from the European Investment Bank in Luxembourg.ESIR loans are an affordable and entrepreneur-friendly option for accelerating growth.

‍ESIR Guarantee / EIR Guarantee: Although the funding is referred to as an ESIR loan, it is often, in fact, a guarantee instrument. The loan is obtained from a bank, but the European Investment Fund guarantees 50% of the loan amount. This guarantee reduces the bank's risk, which in turn keeps the loan margin low.The European Investment Fund has outsourced the decision-making process to so-called intermediary banks. This means that the funding decision is sought from these intermediary banks, and the loan guarantee works such that the European Investment Fund provides a 50% guarantee for the loan. In other words, the intermediary banks grant the loan to the company, and they (the intermediary banks) apply for the 50% guarantee.Additionally, a 30% loan guarantee is sought from Finnvera. It is important to note that Finnvera charges a guarantee fee. The entrepreneur(s) are responsible for guaranteeing the remaining 20% of the loan amount, often covered by personal guarantees from the entrepreneurs or company pledges.In Finland (2020), intermediary banks for ESIR loans include OP Bank, Nordea, Aktia, and soon Danske Bank.
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‍ESIR Loan in Finland: ESIR loans have quickly become a popular form of financing for Finnish growth companies. The application process for a financing decision is relatively fast (even within a few weeks) and the costs are reasonable compared to traditional bank loans. The 80% total guarantee further increases the willingness to use external capital to accelerate growth.Companies, especially startups aiming for rapid growth, have also recognized that it is not always beneficial to seek only equity-based solutions for working capital or assembling a complete financing package. Instead, they often combine external debt capital, particularly when growth is cash flow positive and new investors do not bring immediate strategic advantages. This approach helps avoid unnecessary dilution of shares, and the company's financing becomes more efficient when reasonably priced external capital instruments are used.
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‍ESIR Loan: We have successfully arranged ESIR-guaranteed financing for dozens of Finnish growth companies. If you would like more information about ESIR financing or other funding sources, please contact us using the form below or by calling us directly. Our contact details can be found [here].