EIB loans

Hi,
new to the forum and could do with some urgent advice on this.

Opened business in 2010, purchased and renovated old building. I know, my timing was terrible..

Survived the last 5 years and my building loan is now due to be reviewed. My original loan to renovate the building was with AIB through the European Investment Bank and the rate is currently 2%. AIB sent me a new agreement but say the EIB loan has "expired" and the loan is now being transferred to a commercial loan with a rate of 4.9%. No explanation of why I am not being offered a continuation of the EIB loan.

The EIB website says they offer sustainable finance over the medium and long term to SMEs. My business has grown over the last few years and is less of a risk now than it was 5 years ago.

Is the bank allowed to withdraw the EIB loan? How does this compare legally to people being transferred off tracker mortgages?

Any advice appreciated. Thank you.

Hi Bach

You will have to start by looking at the loan agreement you signed. I suspect it was not a 25 year mortgage. It is more likely to be a normal loan which is repayable on demand or else a loan for 5 years. I would very much doubt that you are legally entitled to long term cheap finance.

Thanks for the reply Brendan.

You are correct it was a repayable on demand 5 year agreement. But does this mean I am not qualified to continue the facility? Are AIB the gatekeepers to EIB loans and if so what are the criteria they use to assess whether a business qualifies?

I don't know the criteria at all for EIB loans

But the legal position is that you have no entitlement to it.

Brendan

An "EIB" loan is not a loan from the "EIB".

Effectively all the EIB does is provide funding at specific "low" rates to Banks provided the Banks use the funds for "qualifying" loans. Loans that qualify are those new loans to SMEs for business purposes only (i.e. can't be used to buy an investment property).

The margin on EIB funded loans are also set at specific rates (the 2% you note above - although if i remember correctly there are a number of different EIB funds as I saw some loans at 2.25%).

Again if i remember correctly, EIB loans are for new investments i.e. you can't use them to refinance previous investments. Replacing your existing loan with a new EIB loan would not be possible.

Actually, googled it and AIB's blurb outlines EIB funded loans have a max tenor of 5 years.
http://business.aib.ie/content/dam/...loans/AIBMCBB112 AIB050G00001BRA4 mid res.pdf

Thanks Andy, that clarifies things alright.