Investment Plan for Europe supports new financing for the cultural and creative sectors in Hungary
- EIF and counter-guarantees will help Hungarian SMEs in the culture and creative sectors, including in the media sector, sustain jobs by unlocking new sources of more accessible financing.
- Agreement allows MVA to expand its offer and for the first time ever support SMEs from the culture and creative sector
- The EIF support is backed by the European Fund for Strategic Investment (EFSI).
The European Investment Fund (EIF) and Magyar Vállalkozásfejlesztési Alapítvány (MVA) will provide €8.2 million (HUF 3000 million) to support Hungarian SMEs in the culture and creative sector sustain jobs and recover faster from the COVID-19 pandemic.
The counter-guarantee agreement will allow MVA to increase its capability to provide guarantees to Hungarian small and medium-sized enterprises (SMEs) and small public enterprises in the cultural and creative sectors, which are particularly hit by the COVID-19 pandemic. The financing will also help smaller media businesses to obtain better access to finance and overcome the challenges they are facing due to the crisis.
The EIF – MVA cooperation reinforces the ability of the national financial sector in Hungary to fuel faster recovery of Hungary from COVID-19 without jeopardizing its long-term stability.
Backed by the European Commission’s Cultural and Creative Sectors Guarantee Facility the agreement is also supported from the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe.
European Commissioner for Internal Market, Thierry Breton, said: “The COVID-19 pandemic continues to heavily affect SMEs in the culture and creative sector. Today’s agreement with Magyar Vállalkozásfejlesztési Alapítvány, supported by EFSI under the EU Cultural and Creative Sectors Guarantee Facility, will help the recovery and support jobs in Hungary’s culture and creative sector. By enhancing their access to finance, cultural and creative businesses will be enabled to continue to contribute to Europe’s rich creative landscape.”
EIF Chief Executive Alain Godard added: “Businesses in the cultural and creative sectors typically have difficulty accessing finance. This is due to the often perceived high risk of their operations and limited available collateral. With EU backing, today we are announcing a first-of-its-kind operation in Hungary that will unlock €10 million of new financing for businesses and small public enterprises in the cultural and creative sectors. We are happy to be leveraging our long standing cooperation with Magyar Vállalkozásfejlesztési Alapítvány to help Hungarian businesses sustain jobs in these sectors during the COVID-19 economic recovery.”
MVA Chairman Dr. Imre Csuhaj-Varju added: “The agreement with the EIF is an important milestone in MVA’s 30-year history. The agreement allows us to extend our Start Guarantee Program, launched 15 years ago, to the creative and cultural sector, which has seen double-digit growth in Hungary every year over the past decade and now employs more than 150,000 people. The COVID-19 pandemic has shattered recent growth and access to credit for the 70,000 businesses operating in this sector has narrowed. With the EIF’s counter-guarantee, we can enter the market with a new credit guarantee product that is tailored to the specifics of the sector in terms of collateral. We are confident that the HUF 3 billion guarantee facility available to us will be fully utilized in a short period of time. We see serious opportunities, especially in festival organization, the film and fashion industry.”
With the counter-guarantees from EIF, the MVA will expand the portfolio of its services to include for the first time ever SMEs in the culture and creative sectors.
About the EIF: The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
About Magyar Vállalkozásfejlesztési Alapítvány (MVA): MVA is a private foundation established in 1990 by the Government of Hungary; with the mission to support the development, promotion and financing of SMEs in Hungary. It benefits from longstanding experience in micro-credits and guarantees.
About the European Fund for Strategic Investments (EFSI): The European Fund for Strategic Investments (EFSI) is the main pillar of the Investment Plan for Europe. It provides first loss guarantees enabling the EIB to invest in more, often riskier projects. The projects and agreements approved for financing under EFSI are expected to mobilise €546.5 billion in investment, supporting over 1.4 million start-ups and SMEs across the European Union.
In Hungary some 28,000 SMEs are set to benefit through EFSI support, which is set to trigger some EUR 4.6 billion in investments.
Cultural and Creative Sectors Guarantee Facility (CCS GF): The CCS GF benefits micro-businesses and SMEs in the cultural and creative sectors, which often face difficulties in accessing affordable debt financing for their projects. The EIF’s guarantee aims to change that. Loans supported by the European Union under CCS GF are now available for business in all of the participating countries, which include the EU Member States, Iceland and Norway. The initiative is expected to create more than €2 billion of new loans and other financial products for final beneficiaries through the guarantee’s catalytic effect. The guarantee facility encourages financial intermediaries to adopt a specific credit assessment approach with SMEs and organisations. They also have the opportunity to receive customised training to better understand the specific needs of the cultural and creative sector projects to increase their engagement in this area.