Micro-financing in Nordics gets SEK 560 million boost with EIF guarantee for Froda

Froda received European Investment Fund (EIF) backing to expand lending to micro companies in the Nordics by SEK 560 million. A guarantee from the EIF, supported in turn by the InvestEU Microfinance and Social Entrepreneurship Guarantee, enables the Swedish micro-lender to offer the new loans on favourable terms to businesses in Sweden, Denmark and Finland that have no more than nine employees.

‍

“Access to finance is still an issue around the EU, especially when it comes to the smallest segment of businesses. Through special initiatives such as this InvestEU guarantee, Froda can improve its lending terms and conditions to reach out to a riskier segment of micro-entrepreneurs because we are guaranteeing part of the risk. This is a clear way in which EU finance can help the most vulnerable entrepreneurs, and we are glad to partner with Froda to make it happen,” says Marjut Falkstedt, CEO at EIF.

‍

Apart from lowering interest rates and collateral requirements on lending by Froda, the EIF guarantee allows the Stockholm-based financial intermediary to reach new market segments. The European backing will specifically benefit micro-lending in the risky start-up field, where loan requirements were previously too high, improving access to finance across the Nordics.

‍

“This collaboration aligns with our vision to assist as many small business owners as possible with financing on favourable terms, as the guarantees allow us to enhance access to financing at improved terms for these entrepreneurs. Our shared agenda with the EIF is to serve the hard-to-serve micro-enterprise segment. In the first few weeks, we have seen that over 50% of our clients are already supported by the programme," says Olle Lundin, CEO and co-founder at Froda.

‍

With an average transaction size of around SEK 160,000 (€13,838), Froda expects to serve around 3,500 micro businesses around the three Nordic countries where this guarantee will be deployed. Europe has 25 million small and medium-sized enterprises (SMEs) and one of their primary growth obstacles is a lack of available financing. Europe’s InvestEU programme, in which the EIF is a main implementing partner, aims to help micro-enterprises in the EU access the financing they need through partnerships with companies specialising in loans for micro businesses.

‍

About The European Investment Fund (EIF)

‍‍The EIF is part of the EIB Group. It supports Europe’s SMEs by improving their access to finance through a wide range of selected financial intermediaries. The EIF designs, promotes and implements equity and debt financing instruments targeting SMEs. In this role, EIF fosters EU objectives in support of entrepreneurship, growth, innovation, research and development, the green and digital transitions and employment.

About Froda
Founded in 2015, Froda set out to redefine business financing by making it accessible, efficient, and empowering for small and medium-sized enterprises. Through digital processes and technological innovation, Froda has shortened the loan process from months to minutes, making it easy for entrepreneurs to invest in their ideas and grow with ease. Today, Froda is one of Europe’s fastest-growing fintech scaleups. With a strategic focus on embedded financing, Froda has expanded across the Nordics, the UK, Ireland and Germany, partnering with industry leaders like Visa, Checkout.com, Lunar. Froda is a licensed credit market company under the supervision of the Swedish Financial Supervisory Authority.