Finnvera’s counter-cyclical financing has been needed

Finnvera’s Counter-cyclical Loans and Guarantees were introduced at an opportune time, in March 2009, when the financial and economic crisis was at its deepest. The counter-cyclical financing granted to date, totalling EUR 204 million, has helped nearly 600 enterprises to overcome financial difficulties caused by the recession. Counter-cyclical financing can still be granted until the end of 2011.

Counter-cyclical financing was a central element in the government’s economic stimulus package, the purpose of which was to ensure financing for enterprises’ working capital needs and for their own adaptation measures. A special precondition for counter-cyclical financing is that other financiers, too, agree to reschedule their receivables or to grant additional financing. This helps ensure continued, comprehensive financing for enterprises during an economic recession as well.

Demand for counter-cyclical financing has been brisk, and the bulk of the financing was granted during the first six months. The greatest demand has levelled off since late 2009, with the revival of the financial markets. By the end of March this year, in total EUR 204 million of counter-cyclical financing had been granted to nearly 600 enterprises.

"In general, counter-cyclical financing has been used to meet needs for working capital, while financing for investments has been low. The range of business sectors is quite wide, which shows that the recession has spread to most sectors. The metals industry has accounted for a little over one third of the total sum; a typical target enterprise has been a machine shop engaged in subcontracting and component manufacture. The wood product industry has also accounted for a considerable share, and sawmills constitute another typical customer group," says Executive Vice President Veijo Ojala.

Among regions, counter-cyclical financing has been particularly popular in Southern Finland and in the most industrialised areas of the country. The product has been used less in developing areas than elsewhere.

The average sums in Counter-cyclical Loans and Guarantees have been clearly bigger than during the recession of the 1990s, the reason being that now counter-cyclical financing has also been granted to larger enterprises, not just SMEs.

"Counter-cyclical financing has been highly useful during the current recession as well. It has certainly helped avoid unnecessary bankruptcies and has supported enterprises in implementing their survival plans," Ojala points out.

During 2009–2011, counter-cyclical financing can be granted for a total of EUR 900 million.

Additional information:
Veijo Ojala, Executive Vice President, tel. +358 20 460 7405 or +358 400 672 401 (Domestic regional financing)