ESA adopts revised state aid guidelines on state aid to promote risk finance investments and on short-term export credit insurance

The EFTA Surveillance Authority (ESA) has adopted two sets of revised guidelines in the field of state aid: one on the promotion of risk finance investments and another on short-term export credit insurance. Both guidelines correspond to guidelines adopted by the European Commission and aim to ensure a level playing field for businesses across the EEA.

The Revised Risk Finance Guidelines

The revised Risk Finance Guidelines clarify the rules under which EEA EFTA States may facilitate access to finance for start-up companies, small and medium-sized enterprises (SMEs), and companies with a medium capitalisation (mid-caps) in their early development phase, while ensuring a level playing field in the EEA.

Risk finance aid is an important instrument that EEA EFTA States can use to help overcome market failures that affect these entities, such as difficulties in access to finance despite their business potential. To tackle such market failures, the Risk Finance Guidelines enable EEA EFTA States to address this funding gap by attracting, through the provision of state aid, additional private investments into the eligible start-ups, SMEs and mid-caps, through well-designed financial instruments and fiscal measures.

The revisions to the Risk Finance Guidelines include:

• The requirement to provide a funding-gap analysis is now limited to only the largest risk finance schemes. The guidelines also clarify the evidence needed to justify the aid.
• Simplified requirements for the assessment of the schemes that target start-ups and SMEs that have not yet made their first commercial sale.
• Certain definitions included in the Guidelines are aligned with those found in the General Block Exemption Regulation, to ensure consistency.

The Revised Guidelines on Short-Term Export Credit Insurance

Export credits enable foreign buyers of goods and services to defer payment. This entails a credit risk for sellers, for which they can insure themselves. This is known as export credit insurance. The guidelines will help ensure that state aid does not distort competition in the EEA among private and public - or publicly supported - export credit insurers, and create a level playing field among exporters.

The revisions entail some technical adjustments, including modifying the eligibility criteria for when small and medium-sized enterprises (SMEs) can benefit from state insurance.

In the list of marketable risk countries annexed to the guidelines, ESA includes Liechtenstein in addition to the countries included by the European Commission. Trade within the countries in the list entails marketable risks. This means that there should be sufficient capacity provided by private insurers and, in principle, such risks should not be insured by the State or by State supported insurers.

ESA will not apply the list of marketable risk countries before 1 April 2022, in order to assist the economy in the context of the COVID-19 pandemic.

Both of the revised guidelines will apply from 1 January 2022.

You can read ESA's decisions here and here.