The factory is critical to Europe's effort to compete with Asian rivals such as CATL, Samsung and LG Chem, which are leaders in the battery market after locking in supply deals with carmakers.
Northvolt got a boost on Wednesday when IKEA said it was in the final stages of talks about participating in the fundraising for the factory.
Northvolt asked the EIB for the loan in September, part of a 1.5 billion euro fundraising, split equally between debt and equity, to build half of its planned 32 gigawatt hours (GWh) of annual battery capacity by 2023.
"The EIB's approval is one really key piece of the puzzle in putting together that full funding," co-founder Peter Carlsson, a former Tesla executive, told Reuters, adding that Northvolt expected to close the funding round before August.
Other potential debt and equity investors had viewed the EIB's approval as a crucial indicator of the project's viability, he added, given the due diligence the bank would have carried out before granting the loan.
Equity investors have been wary of the lead taken by Asian companies, but Northvolt says it expects cost savings from bringing a larger portion of cell making in-house to make it competitive.
Battery suppliers are also competing for raw materials as carmakers try and cut the use of expensive minerals, especially cobalt, from electric car batteries, to reduce costs.
Carlsson said the cells Northvolt is currently building are close to the low-cobalt NMC811 formula used by Tesla-supplier Panasonic.
"It is also fair to assume that the cobalt content will continue to fall and there will be efforts to further raise the nickel content to create even higher and richer energy densities," he said.
Carlsson said Northvolt was putting together a consortium of banks to arrange the remaining debt and looking for industrial and financial investors to provide equity.
Automakers have been ploughing funds into battery production and development, a key battleground in their electrification ambitions.
Swedish carmaker Volvo said on Wednesday it had signed long-term battery supply deals with LG Chem and CATL as it pursues its EV target of 50 percent of sales by 2025.
Northvolt estimates the European electric vehicle market will need 500-600 GWh of annual capacity by 2030, or at least 10 factories as large as Tesla's U.S. Gigafactory.
The company had intended to sell half its battery capacity to grid storage and industrial and portable application customers but Carlsson said 80 percent of the 16 GWh it had already sold had gone to automakers.
"As automotive companies are now launching their new portfolios of electrified vehicles ... we see a larger appetite for very, very strongly committing to volumes," he said.
Volkswagen truck brand Scania told Reuters this week it was participating in the financing talks and had signed up to buy batteries from Northvolt, while a banking source named a number of other participants.
Carlsson said several other large German manufacturers were among its customers, but declined to identify them. The company has also applied for German funding to build a second factory in the region, as well as for a project with Volkswagen.
(Reporting by Esha Vaish; editing by Niklas Pollard; Editing by Kirsten Donovan)
By Esha Vaish