EFSI Skills and Education Guarantee Pilot An initiative of: Skills - PowerPoint PPT Presentation

EFSI Skills and Education Guarantee Pilot An initiative of:

Skills and Education Pilot 2 Agenda 1 The S&E Pilot 2 Capped (counter-)guarantee 3 Financial Intermediaries 4 Final Recipients and terms 5 How to apply 6 Implementing the guarantee

3 The S&E The Skills and Education (S&E) guarantee pilot is a new debt financing initiative dedicated to guarantee stimulating access to finance in education, training and skills. pilot

Skills and Education Pilot Skills and Education Pilot 4 The Skills and Education guarantee Tackling the EU skills and education financing gap EU policy objective to We support key policy invest in EU quality and objectives of the EU by Financing gap inclusive education, addressing funding gaps training and lifelong and facilitating access learning to finance Europeans will have 120 to upskill or reskill in million EFSI the next 5 years Skills and jobs by 2025 will be 16 Education created requiring million Pilot higher skills European Investment Fund of EU employers 40% struggle to find people with up-to- date skills 4 *Data according to European Small Business Finance Outlook by EIF and SAFE, Access to Finance of Enterprises in the euro area

Skills and Education Pilot Skills and Education Pilot 5 The Skills and Education guarantee Sharing risks with our partners Final Recipients Role of the EIF Financial Intermediaries Using resources from the Category A EU, we share risks with Students and learners our partners to incentivise lending EIF provides a Category B Provide Banks and Professional Enterprises investing guarantee * Financial access learners in skills to loans Institutions Category C Students and Organisations supplying learners education & training** European Investment Fund Provide Category A Organisations access EIF provides a supplying Students and learners to deferred Students and learners guarantee * education & payment of training fees 5 *Capped up to 25% of the guaranteed portfolio. **Or developing projects in the field of education.

6 Capped Under the S&E Pilot, EIF provides a free of charge capped portfolio guarantee to selected guarantee: Financial Intermediaries. key terms

Capped guarantee: key terms 7 Capped portfolio (counter-) guarantee Key terms Up to Up to Free of 80% 25% charge Guarantee rate of up to 80% Up to a maximum No guarantee fees are charged on a transaction by guarantee cap rate of 25%. and no penalties are applied transaction basis* The cap rate is to be determined based on the portfolio of debt financing to be guaranteed 7 7 * Transactions encompass loans, deferral of payments, etc to eligible final recipients.

Capped guarantee: key terms 8 Guarantee terms Financial instrument Capped portfolio guarantee Guarantee rate Up to 80% Maximum guarantee cap rate Up to 25% Guarantee fee Free of charge • 15 years for Category A Final Recipients Guarantee tenure • 10 years for Category B and Category C Final Recipients Minimum financial intermediary risk retention 20% Repayment terms Can be defined specifically together with the Financial Intermediary Up to Permitted Capitalised Interests as defined in the relevant Guarantee Coverage of accrued or capitalised interest Agreement Availability period Generally up to 3 years 8 8

9 Financial Who can become an EIF partner for the implementation of the S&E Pilot? Intermediaries

Financial Intermediaries 10 S&E partners Lending and deferring payments under the S&E Pilot Banks or other Organisations Financial supplying education Institutions: & training* • Any institution authorised to carry out debt • Any provider of higher education and financing or issue guarantees trainings, e.g. universities, VET providers • Based in a Member State of the EU • Based in a Member State of the EU • Willing to provide loans or guarantees to • Willing and capable of operating a system eligible Final Recipients under any of the of deferral of payments of fees for its own Categories A, B, C students / adult learners - eligible Final Recipients falling under Category A 10 10 * Or developing projects in the field of education.

11 Final Who can benefit from financing made available under the S&E Pilot through EIF’ s partners? Recipients and terms

12 Final Recipients and terms Eligible Final Recipients and terms Summary Banks or other financial institutions Financial intermediary Organisations supplying education & training* Organisations supplying Students and learners Enterprises investing in skills Final education & training 2 Recipients (Category A) (Category B) (Category C) SMEs and Small Mid-Caps (<500 staff, Any entity/organisation of any legal form, Individuals ≥ 18 years Client size including public entities) engaged in an economic activity • • Up to EUR 2m / investment or working capital Up to EUR 2m/ investment or working Financing Up to EUR 30k per student /learner loan capital loan • • amount Limited to 2x direct planned costs Minimum 12 months • Minimum 12 months Tuition fees, living, accommodation and Direct costs (i.e. fees, travel & subsistence, labour, Investment or working capital loan related Financing transport fees, text books and other training materials & premises) & to an “ eligible business activity or Expenses related to an ‘ ’eligible Indirect costs, related to an ‘’eligible investment purpose** project ” educational programme’’ into skills’’ No collateral or parental (or other third n/a Others n/a party) guarantee 12 12 * Or developing projects in the field of education. **Check next slide for further information

Final Recipients and terms 13 Eligible financing Purpose of eligible financing, other debt financing and guarantees, per Final Recipient category Students and learners Enterprises investing in Organisations supplying skills education & training* Cover costs of an “eligible Cover costs of an “eligible Cover costs of entities carrying out an educational programme ” , such as: investments into skills” , such as: “eligible business activity or develop an eligible project” , such as: • • programmes under ISCED apprenticeships • • classifications 3-8 programmes leading to nationally NACE CODE P business activity (min. • programmes leading to nationally recognised qualifications 20% of the sales/turnover deriving from • recognised qualifications traineeships education/skills activity); or • • • trainings in digital skills student entrepreneurship developing a NACE CODE P project • • trainings in labour market skills digital skills •  NACE CODE P includes pre-primary education, trainings / other skills acquisition primary education, secondary education, higher education, other education, educational support 13 13 activities *Or developing projects in the field of education.

14 How to apply A quick guide to our Call for Expression of Interest and the necessary documentation and application process.

How to apply 15 Four step process To become a Skills & Education guarantee partner 1 2 3 4 Submit expression Access documentation Due diligence & approval Guarantee agreement of interest If approved by the EIF’s Board, An open Call for Expression of Submit relevant documentation EIF will conduct a screening and, if Interest is published on our website. before the deadline. pre-selected, a due diligence. guarantee agreement is signed. Application deadline: Negotiations on, e.g.: Marketing and roll out commences. Click to read  maximum fee deferral volume 31.10.2020  repayment terms for (Up to) 3 year inclusion period students/learners commences. s-e-pilot@eif.org  guarantee terms • guarantee rate • cap rate • availability period etc. The selection process takes approx. 2 to 4 months (depending on quality of the information received) 15 15

How to apply 16 Evaluation criteria Each application is evaluated in chronological order using these criteria Completeness of application Formal in accordance with the criteria provisions of the Call  Number and “type” of Final Recipients, e.g. • low income Evaluation • Sector of companies Impact  Prior experience with criteria • Educational programmes criteria loan/fee deferral offered by organisations schemes Quality  Geographical reach  Quality of the criteria implementation plan  Complementarity to local support • rollout strategy schemes • proposed volumes • favourable terms for Final Recipients 16 16

How to apply 17 Application documentation Which information to submit Business activity General Institution description information about Geographical reach your institution Financial standing Operating principles Prior experience in offering loans or fee deferral schemes, including volumes Position in the market Envisaged volumes (number of Final Recipients) Specific information Loans/Fee deferral characteristics about the proposed Average EUR amount of loan/fee deferrals foreseen loan/fee deferral Complementarity with local support schemes scheme Pricing e.g. interest rate reduction Favourable terms for Final Recipients Grace periods Min/max maturity Marketing plan Implementation strategy Internal readiness (systems, procedures) 17 17

18 Implementing Marketing and reporting obligations. the guarantee