Counter-cyclical financing for enterprises to continue

Finnvera can continue to grant counter-cyclical financing until the end of 2012. Counter-cyclical financing is intended for companies with no more than 1,000 people that have difficulties in obtaining financing because of the weaker economic outlook and unstable financial markets. It can be granted to companies deemed to have the prerequisites for profitable business once the economic situation improves.

“Since the economic outlook is uncertain, it is highly justified to continue counter-cyclical financing. Special measures will be needed if the availability of financing from the private market becomes more difficult. Many SMEs have yet to recover fully from the previous recession. Thus, enterprises may find themselves in a rapidly declining situation if economic growth slows down dramatically in Finland. Counter-cyclical financing has been an efficient tool, and about 1,200 enterprises have already made use of it,” says Senior Vice President Annamarja Paloheimo, responsible for Finnvera’s financing for SMEs.

An enterprise may utilise counter-cyclical financing to ensure its liquidity or to finance an investment boosting its competitiveness. It is also suitable for financing company acquisitions or for meeting the financing needs of a newly-founded, growth-oriented enterprise. Before the financing decision, Finnvera determines whether the enterprise has prerequisites for profitable business when the economic situation improves. Additional funding from other principal financiers or the rescheduling of claims is also required before financing can be granted.

“In autumn 2010, the OECD conducted a survey where our clients were asked about the effects of the counter-cyclical financing they had received on their business. About 40 per cent of the respondents said that the financing had saved their company from bankruptcy,” Paloheimo underlines.

Finnvera has granted counter-cyclical financing since 6 March 2009, for a total of EUR 470 million. When granting Counter-cyclical Loans and Guarantees, Finnvera can take greater risks than normally, owing to the State’s raised compensation for losses. The State’s compensation for any losses incurred by Finnvera in counter-cyclical financing is higher than the compensation for losses in other financing products.

Counter-cyclical Loan
Counter-cyclical Guarantee

Additional information:
Annamarja Paloheimo, Senior Vice President, Finnvera, tel. +358 20 460 7267