Swedish Froda Secures €150M from EIF to Address Europe’s SME Funding Gap

Small and medium-sized enterprises (SMEs) in Europe face a considerable financing gap estimated at €400 billion, leaving many businesses without the resources they need to grow. In response, the European Investment Fund (EIF) has been working through targeted guarantee programs to increase financing options for SMEs. One of its most recent collaborations is with Sweden-based Froda, a company focusing on digital business loans, which has now secured €150 million in total funding through EIF guarantees.

The new agreement includes an additional €100 million in lending capacity on top of a previous €50 million guarantee, giving Froda greater reach across all 27 EU member states. This expansion is set to benefit European SMEs by making financing more accessible and flexible. Olle Lundin, Froda’s CEO and co-founder, highlighted that the new funds will allow them to enhance their technological capabilities, improve customer experience, and better manage risk. “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,” he said.

Founded in 2015 by Olle Lundin, Oliver Mohseni Skoglund, and Martin Roxland, Froda aims to close a critical gap in the market where traditional banks have struggled to meet the needs of SMEs due to time-consuming processes and strict requirements. By providing faster and more efficient financing solutions, Froda seeks to ensure that small businesses can access the same opportunities as their larger counterparts. Lundin explained, “The goal is to help business owners turn their ideas into reality by simplifying the traditional, slow lending process into something that takes minutes instead of months.”

Unlike competitors such as Tink AB, Trustly, and Lendify, Froda’s model is data-driven and specifically tailored to entrepreneurs, a group often underserved by banks due to limited credit history or lack of collateral. Using machine learning and fully digitized processes, the company has streamlined the lending experience, making it more inclusive and efficient. SMEs that have secured loans through Froda have seen an average growth rate of 131% within their first year of funding.

Lundin emphasized that Froda’s unique advantage lies in its credit institution license, which allows it to fund loans directly via deposit accounts. “This leads to lower funding costs, no bank sponsor requirements, and the ability to operate cross-border within the EEA,” Lundin said. With the additional backing from the EIF, the company is well-positioned to scale its operations and continue addressing the financial needs of SMEs across Europe.

Since 2021, Froda has attracted significant backing from prominent investors, including Karl-Johan Persson, chairman of H&M, Victor Jacobsson, co-founder of Klarna, and Nicklas Storakers of Avanza. Their support highlights the market’s confidence in Froda’s ability to transform SME financing.

As part of the new agreement, Froda Embedded partners will gain access to EIF-backed loans, allowing them to extend financing solutions across the EU. This collaboration aligns with the EU’s goals of promoting entrepreneurship and digitalization. Marjut Falkstedt, CEO of EIF, explained, “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.”