The Export and Investment Fund of Denmark, EIFO, now gets the opportunity to aid Danish businesses in the creative and cultural professions with access to capital under favorable terms with a guarantee put forward by the European Investment Fund, EIF.
Businesses within design, game development, IT development, music, film making or the arts can now get easier access to capital and at a lower interest rate. This is the result of a collaborative initiative between EIFO and the European Investment Fund, EIF.
The agreement is supported by the Europen Union and the new InvestEU initiative. As a result, EIFO can, backed by a guarantee from EIF, offer attractive loans for up to 300 million DKK to Danish businesses within the creative and cultural professions.
Agreement eases access to capital
According to EIF, there is often limited access to capital for businesses within the cultural and creative sector. It can be harder to obtain a loan for a film production, as budget and accounting is done differently than with a business that keeps a traditional inventory.
As a result, it can be difficult for banks to rate the businesses’ credit, just as there is often an association of a larger risk in connection to the providing of loans to creative projects, even though this is not necessarily the case. EIFO can obtain a part of the risk by taking part in the financial solution and, in collaboration with the bank, secure that the financing comes through for the businesses.
Supports creative and cultural businesses
The creative and cultural sector covers more than 8 million jobs within the EU and is accountable for 3.95 percent of the GDP of the EU. The sector provides a substantial contribution to the economy at large, and the new agreement aims to combat some of the many financial bottlenecks within the sector.
Because it should not be rigid credit evaluations and limited options for loans that stand in the way of the sectors’ ability to unfold.
Traditionally, the financing of the industries has been characterized by support programs and subsidies, but there is a large potential for financing through loans, which the new guarantee program enables. Specifically, the agreement will make EIFO even more flexible when addressing the budget of the business at hand, and in some instances the business can achieve an interest rate reduction of four percent when compared to the usual interest rates offered by EIFO.
“Access to finance for businesses in the creative and cultural sectors continues to be an issue in Denmark and across the EU in general. It can be difficult for banks to rate the businesses’ credit, as there is often an assumption of a higher risk in connection to creative projects, even though this is not necessarily true. Through this collaboration, our aim is to eliminate part of the risk and help to channel financing towards the cultural and creative sectors that play such a critical role in our society and identity,” says EIF Chief Executive Marjut Falkstedt.
“The creative and cultural businesses hold the potential to putting Denmark on the world map and be catalysts for growth, innovation, and renewal. It is vital that we acknowledge the large potential and competitive power within these industries, and there is a need for better terms in financing for these businesses. With our willingness to take risks in financing, EIFO paves the way for those who dare to think bigger, and we are glad to be able to contribute to this very special agreement through EIF,” says Signe Thustrup Kreiner, Chief Commercial Officer, EIFO.
