The EU provides loans, guarantees and equity as forms of financial assistance to support its policies and programmes. Where in the past, the EU have mostly used direct grants to promote development in our partner countries, we now aim to bring in other sources of public and private finance to complement our own development funding. For example, the EU provides loans to businesses of all types for investment in research and innovation. It also provides guarantees to help beneficiaries to obtain loans more easily or at better conditions from banks and other lenders. The EU may also financially participate in a project by owning parts of it.
With guarantees we share the risk associated with investing and lending in developing countries, so that private investors and development banks will finance entrepreneurs or development projects. That means in the unlikely event that a loss occurs, the EU will pay part of it.
Learn more about guarantees and blending: https://ec.europa.eu/international-partnerships/guarantees-and-blending_en