Europe faces an SME financing gap of €400 billion, leaving many small businesses unable to access the funding they need to grow and compete. The European Investment Fund (EIF) addresses this challenge through various guarantee programs that expand financing options for SMEs.
One is a partnership with Froda, a company that just secured an additional €100 million in lending capacity from EIF, a key player in addressing the SME financing gap. This builds on an existing €50 million guarantee, bringing the total to €150 million and extending the company’s financing reach across all 27 EU member states. This brings Froda’s total funding to $168.5M.
The funds will boost Froda’s lending capacity, enabling it to reach more European small businesses. “With the €150 million secured through our EIF partnership, we can offer better terms and expand our technology platform, improving data analytics, risk assessment, and the overall customer experience. This helps us reduce risk while providing more accessible financing to SMEs,” noted Olle Lundin, CEO and co-founder of Froda, in a conversation with TFN.
Froda’s mission: accelerating small business growth through digital lending
Founded in 2015 by Olle Lundin, Oliver Mohseni Skoglund, and Martin Roxland, Froda addresses a critical market gap: traditional banks’ inability to serve SMEs due to lengthy processes efficiently. The company strives to make business financing accessible and affordable, giving small businesses the same growth opportunities as their larger counterparts.
Lundin told TFN: “The goal is to help business owners turn their ideas into reality by simplifying the traditional, slow-leading process into something that takes minutes instead of months. By offering flexible, tech-powered solutions, Froda provides financing to businesses that often get overlooked by traditional banks due to credit history or lack of collateral. So, the decision to found Froda was driven by a real market need.”
Unlike competitors Tink AB, Trustly, and Lendify, Froda created a data-driven digital financial product specifically for entrepreneurs, a group traditionally underserved by banks. By digitising operations and using machine learning, the company has made lending faster, fairer, and more inclusive. The effectiveness of Froda’s financing model is straightforward: SMEs using their services have seen an average growth of 131% in their first year after receiving funding.
Lundin elaborated further: “What sets us apart from our competitors is our credit institution license. It allows us to fund our lending via deposit accounts, which leads to lower funding costs, no bank sponsor requirement, and the ability to operate cross-border in the EEA. With the EIF partnership adding further credibility and scale, Froda is uniquely positioned to offer fast, fair, and accessible financing to SMEs when needed most.”
Since 2021, Froda has been backed by influential investors who believe in its potential for success. These include Karl-Johan Persson, the billionaire businessman and chairman of H&M; Victor Jacobsson, a co-founder of Klarna; and Nicklas Storåkers, associated with Avanza, European Investment Fund (EIF), Tacito Partners, and Svea Bank.
Building a robust financing ecosystem for small businesses across Europe
Froda and EIF share a vision of creating a strong financing ecosystem for European small businesses. The new agreement broadens opportunities for Froda Embedded partners, allowing them to offer EIF-backed loans throughout the EU. Through these innovative financial solutions, the partnership advances EIF’s mission to promote microfinance, entrepreneurship, and inclusive growth — while supporting the EU’s digitalisation goals and fair access to financing.
As the first company to obtain a microfinance guarantee covering all member states, Froda is tackling the SME financing gap by empowering underserved microbusinesses and building a more assertive European financial ecosystem.
“The extended support from EIF marks a crucial step in our mission to unlock growth opportunities for SMEs across Europe. This partnership will reshape SME financing by helping our Embedded partners expand into new markets. Our vision is to build a financing ecosystem that enables cross-border growth for both Froda and our partners,” says Olle Lundin, CEO and co-founder of Froda.
“The InvestEU program delivers scalable, high-impact solutions for microfinancing. We’ve seen how EIF’s targeted guarantees in Sweden have helped Froda drive growth for micro-enterprises. As we expand this model across the EU, I’m confident our strengthened partnership will create a robust, lasting financing infrastructure that supports Europe’s entrepreneurial foundation,” says Marjut Falkstedt, CEO of EIF.
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