Finnvera’s counter-cyclical financing: ideal for investments

Finnvera can still grant counter-cyclical financing to companies until the end of the current year. Last year, demand for counter-cyclical financing fell from the figure for 2009 because companies had little need for financing associated with investments and working capital. The terms of counter-cyclical financing have now been revised; thanks to increased flexibility, the product is better suited to financing the working capital required by investments and growth.

“There is the risk that the low level of investments by companies in Finland will thwart the economy’s growth potential. Counter-cyclical financing is a way of boosting new investments. After these revisions, our counter-cyclical financing is also an excellent instrument for financing investments,” says Executive Vice President Veijo Ojala of Finnvera.

The terms of Finnvera’s Counter-cyclical Loan and Guarantee have been revised by extending the loan and guarantee period from six years to ten years. The shortest loan and guarantee period is two years.

“We extended the repayment times of Counter-cyclical Loans and Guarantees to make it more feasible to finance long-term investments.”

Counter-cyclical financing can be granted to companies that have fewer than 2,000 employees. The companies must also have the prerequisites for profitable business. Another condition is that the other financiers are also ready to provide additional financing or to reschedule their claims. This ensures comprehensive financing for companies.

Most of the counter-cyclical financing granted so far has been used for working capital needs; less financing has been sought for investments. The metal industry has accounted for about one third of the total sum. A typical target enterprise has been a machine shop engaged in subcontracting and partial deliveries. The wood product industry is also a major client for this type of financing, and sawmills are a typical client segment.

At present, the average sums of Counter-cyclical Loans and Guarantees have been clearly higher than during the recession of the 1990s, since now it has also been possible to grant counter-cyclical financing to companies larger than SMEs.

Finnvera’s counter-cyclical financing was introduced on 6 March 2009, at the height of the financial and economic crisis. In autumn 2010, the OECD conducted a survey where our clients were asked how the counter-cyclical financing that they had received had affected their business. About 40 per cent of the respondents said that the financing had saved their company from bankruptcy.

Additional information:
Veijo Ojala, Executive Vice President, tel. +358 20 460 7405