COSME – Loan Guarantee Facility

COSME is the EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises. One of the main objectives of COSME is to provide access to finance to SMEs in different phases of their lifecycle, namely creation, expansion or business transfer.

COSME’s Loan Guarantee Facility (COSME-LGF) provides guarantees and counter-guarantees to financial intermediaries such as banks and leasing companies so that they can provide more loan and lease financing to SMEs. The guarantees ensure that those financial intermediaries can expand the range of SMEs and the types of financial transactions they can support. Due to the leverage effect, many SMEs can benefit from COSME-LGF and the impact is enormous. It is expected that up to 330,000 SMEs will receive loans that are backed by COSME guarantees with a total lending value of up to EUR 21 billion.

COSME also has an equity instrument: COSME – Equity Facility for Growth.

Post 2020 – InvestEU Programme & SMP

The new InvestEU Programme, implemented in the course of 2021-2027, will bring together multitude of EU financial instruments. By bringing together the different financing programmes under one roof, project promoters can benefit from simple and streamlined investment and advisory support.

It is foreseen that the objectives of the COSME programme will be captured by two new programmes. The financial instruments of COSME will be incorporated in the InvestEU Programme, including COSME’s Loan Guarantee Facility. The non-financial activities of the COSME programme will become part of the Single Market Programme (SMP), focusing mainly on improving SME’s access to the EU market.

What is the relevance for Circular City initiatives?

Scale-ups and other SMEs play a very important role in the transition to a circular economy in cities. Besides the fact that most of them are located in urban areas, they often develop new technologies and business models necessary to enable the circular transition. However, due to limited financial resources and high-risk profiles, SMEs usually have difficulties to obtain funding and financing to market their products properly. By providing guarantees, COSME-LGF lowers the barriers for financial intermediaries to fund SMEs.

As a city government, you help financial institutions and SMEs by pointing them to the opportunity of COSME-LGF.

How to apply?

For SMEs:

SMEs that are looking for debt finance can search through the lists of financial intermediaries external link icon and sub-intermediaries external link icon that are operating under COSME-LGF.

For financial institutions:

Financial or credit institutions, guarantee institutions, and loan (debt) funds that operate in one or more EU Member States and that are duly authorised to carry out lending or leasing activities to SMEs according to applicable legislation are eligible to become EIF’s financial intermediary under COSME-LGF. The application period for financial institutions for the COSME Loan Guarantee Facility has closed November 2020.

More information on COSME-LGF can be found on the website of the European Commission external link icon and on the website of the European Investment Fund external link icon.